Cross-Listing of Korean Companies on Foreign Exchanges : Law and Policy

Abstract

The Korean case may be the only example that shows governmental adoption of the piggybacking paradigm focusing on cross-listing. The story of Korea is particularly interesting because it tells us the opposite of what many developing countries pursue in respect of migration of their firms to foreign markets. What caused Korea to adopt such a policy? Perhaps, it was the exogenous shocks it experienced durign the financial crisis in 1997 followed by the involvement of international lending agencies in an

unprecedent sweeping reform process. This essay reviews current discussions on the relations between cross-listing and corporate governance reform from a Korean perspective. Being largely descriptive, this essay focuses on the Korean governments new policy towards corporate sector and capital markets

reforms through cross-listing of the Korean firms on foreign exchanges. After a quick introduction to some empirical findings on market reaction to cross-listings of Korean companies, it discusses recent change in regulations that govern the cross-listing of Korean companies on foreign exchanges as well as that of foreign companies on Korean exchanges. This essay concludes by putting the Korean situation in context of the on-going academic discussions on competition among stock exchanges and regulatory

competition on an international scale.