الملخص الإنجليزي
Abstract:
Cross listing has become a worldwide phenomenon and is considered a great way for
listed companies to raise extra capital and gain access to new markets and segments.
However, the impact of cross listing is very vague and data and research regarding the
subject in relation to the Arabian Gulf are very limited. It is very imporiant to know the
implications of cross listing; in addition, the relationship between cross listing and the price
movement of the cross listed company in both the home and host markets (i.e., existence
of arbitrage).
Purpose: The purpose of this research study is to not only gain a better insight on
the performance and consequences of cross listing in the Gulf, but also whether arbitrage
trading is possible or not, taking into consideration the difference in the listing currency
between home and host markets, along with the level of volume traded on the stock.
Approach: The sample data for this research study was manually collected from the
official websites of the Bahrain Bourse, Boursa Kuwait and the Dubai Financial Markets,
whilst exchange rates have been gathered from the Bloomberg Terminal system. There
were 8 Bahraini cross listed companies as of 31$1 December 2019; however, 4 companies
have been excluded due to extreme illiquidity of the stocks in both the home and host
markets; therefore, a sample data of 4 firms were analysed using EViews 9 software and
Statistical Product and Service Solutions (SPSS). The Wilcoxon Test was conducted to test
for arbitrage between home and host markets; Multiple regressional analysis was
performed to test the relationship between arbitrage and liquidity, returns, and exchange
rate; the Granger Causality test was used to test for causality between arbitrage and
exchange rates.
Findings: The Wilcoxon Test showed that there is a significant difference in share
price of certain listed companies tested, on a yearly basis and for the period of 2016 to 2019
as a whole. The multiple regression showed different results for each analysed cross listed
company, indicating that arbitrage is company based and not an index based, whilst the
Granger Causality test showed that the exchange rate was not the cause of arbitrage, vice
versa.
