The Stock Market Reaction to Losing or Gaining Foreign Private Issuer Status

Brian M. Burnett, Bjørn N. Jørgensen, Troy J. Pollard

Research output: Contribution to journalJournal articleResearchpeer-review


The U.S. Securities and Exchange Commission designates foreign-domiciled firms with securities trading in the U.S. markets as either foreign private issuers (FPIs) or domestic filers and permits exemptions from U.S. domestic securities regulation for firms that qualify as FPIs. We study the stock market reaction to foreign-domiciled firms that lose or gain FPI status for an arguably exogenous reason while maintaining their cross-listing status. After loss of FPI status, foreign firms are required to comply with U.S. domestic issuers’ continuous filing requirements, such as filing quarterly financial statements using U.S. GAAP, disclosure of insider trading, and compliance with corporate governance requirements of U.S. domestic issuers. We document a significantly positive market reaction when foreign firms lose their exemptions and must comply with regulatory requirements of U.S. domestic issuers. Further, we find that the market reacts negatively to an increase in financial statement requirements and reacts positively to fully adopting U.S. corporate governance requirements.
Original languageEnglish
JournalJournal of Accounting and Public Policy
Issue number2
Pages (from-to)101-118
Number of pages18
Publication statusPublished - 2017
Externally publishedYes


  • Corporate governance
  • Financial reporting
  • Foreign private issuer
  • Market reaction

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