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The Wall Street Journal reported November 28 on findings of the new, independent Committee on Capital Markets Regulation which is coordinating its efforts with the U.S. Treasury. The article prominently featured research by committee member and GSB professor Luigi Zingales.
Zingales, Robert C. McCormack Professor of Entrepreneurship and Finance, examined whether or not the U.S. market is loosing its competitive edge. Specifically, he looked at the premium investors paid for shares of foreign companies listed in the U.S. His research showed a significant drop in the premium since 2002. Among the companies that experienced the greatest decline were those based in countries with strong corporate governance standards.
Zingales says his research suggests that regulatory compliance and related factors played a role in reducing the value of cross-listing in the U.S. A report on his findings will appear in The Journal of Economic Perspective.
The committee’s recommendations will have long-term repercussions. The competitiveness of U.S. capital markets affects jobs and profits in this country. It also influences a company’s ability to raise capital which further impacts investment and economic growth.
Read a draft of the research “Is the U.S. Capital Market Losing Its Competitive Edge?”