The majority of trading in stock shares of Mexcian companies is done on U.S. exchanges, according to the print edition of today's Wall Street Journal (page A15). The U.S. stock exchanges have better rules and better enforcement of those rules; traders rightly feel more comfortable trading on the U.S. exchanges than the Mexican ones. The Mexican companies choose to abide by the stricter U.S. rules to increase the company's stock prices.
The ability of companies to list their stock on another country's stock exchanges breaks the historic relationship between location of the company and the accounting rules the company must follow — a disaggregation of authority as well as location. Breaking the relationship allows companies to be more creative in how they regulate their affairs: Some relocate to off-shore havens with lax accounting rules, and others relocate to places with stricter, more trustworthy, and hence more valuable accounting rules.
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