The Effects of Dual Listing on Share Prices and Liquidity in the Absence of Registration Costs

In the year 2000, the Israeli Securities Authority (ISA) initiated a new amendment to the Securities Law aimed at pro- moting dual listing of Israeli companies, already traded in the US, and not in Israel, by exempting them from the burden of additional reporting to the ISA. According to this amendment, the ISA agreed to rely solely on the reporting re- quirements of the US SEC. Since then, more than 30 Israeli companies, traded on Nasdaq decided to list their shares on the TASE as well. This event allows us to examine the effect dual listing had on share prices and liquidity in a unique setup that annuls the costs of dual listing registration. The main findings are as follows: 1) trade volume of the dual listed companies has grown by about 123% on; 2) about 42% of the total volume is on the TASE without adversely a f- fect the trading volume on the Nasdaq; 3) as a result, share prices went up by about 9%. One possible policy implica-tion of these find ings is the positive in fluence harmon ized sup ervision may have over internationa l capital markets such as the Single Passport in Europe