Disclosure requirements and stock exchange listing choice in an international context

Steven Huddart, John S. Hughes, Markus Brunnermeier

Research output: Contribution to journalArticlepeer-review

95 Scopus citations


We use a rational expectations model to examine how public disclosure requirements affect listing decisions by rent-seeking corporate insiders, and allocation decisions by liquidity traders seeking to minimize trading costs. We find that exchanges competing for trading volume engage in a 'race for the top' whereunder disclosure requirements increase and trading costs fall. This result is robust to diversification incentives of risk-averse liquidity traders, institutional impediments that restrict the flow of liquidity, and listing costs. Under certain conditions, unrestricted liquidity flows to low disclosure exchanges. The consequences of cross-listing also are modeled.

Original languageEnglish (US)
Pages (from-to)237-269
Number of pages33
JournalJournal of Accounting and Economics
Issue number1-3
StatePublished - Jan 1999
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Accounting
  • Finance
  • Economics and Econometrics


  • Exchange listing requirements
  • G15
  • Insider trading
  • K22
  • Liquidity
  • M41
  • Securities regulation


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