Investors have sharply reduced the premium they pay for shares of foreign companies listed in the U.S. since a regulatory crackdown on corporate malfeasance in 2002, according to new academic research.

The findings figure prominently in a report to be released Thursday by the Committee on Capital Markets Regulation, a private-sector group studying the negative impact of regulation on the competitiveness of U.S. financial markets with the support of Treasury Secretary Henry Paulson.

Shares of foreign companies listed both in the company's home market and on a U.S. stock market traditionally trade at a higher valuation as a percentage of book value than domestic peers that aren't cross-listed. Investors may pay more for a company listed in the U.S. because they put more trust in a company that has met stringent U.S.-listing standards or because there is a deeper market for U.S.-listed shares.

That premium for listing on both a U.S. and home-stock market has dropped sharply since 2002, according to Luigi Zingales, a finance professor at the University of Chicago's business school and a member of the capital-markets committee.

Mr. Zingales measured the advantages of listing in the U.S. by tracking the difference between market value (the price at which company's stock trades) and book value (the accounting value of its assets.) If a cross-listed company traded at 150 percent of book value and a similar company from the same country listed only on their home market traded at 120 percent of book value, the "valuation premium" would be 30 percentage points.

The premium for listing on both U.S. and foreign markets averaged 51 percentage points from 1997 to 2001. It dropped to 31 percentage points between 2002 and 2005, Mr. Zingales found.

"We raised the cost of being public in the U.S.," said Glenn Hubbard, dean of the Columbia University business school and co-chairman of the capital-markets committee. "These things have long-term consequences."

For the past year, government leaders, financial executives and academics have raised alarm bells about declining competitiveness of U.S. capital markets in the face of greater competition from capital markets in Europe and Asia. After leaving Goldman Sachs Group Inc. to become Treasury secretary, Mr. Paulson has made responding to this threat one of his priorities, to the strong applause from business. The report of the capital-markets committee -- directed by Harvard law professor Hal Scott and co-chaired by Mr. Hubbard and former Goldman Sachs executive John Thornton -- is likely to figure in Mr. Paulson's campaign. Losing ground to capital markets in London and Asia could hurt U.S. jobs and profits and raise U.S. companies' cost of capital, hindering investment and economic growth.

In his research, Mr. Zingales found the premium for a U.S. listing fell most sharply for companies from countries with well-regarded corporate-governance standards, such as Japan, Hong Kong, Canada and the United Kingdom. He says that implies investors saw little additional benefit to companies from those countries being listed in the U.S. after 2002, and significant additional cost. He measures corporate-governance quality by how well minority shareholders are treated relative to controlling shareholders.

By contrast, companies from countries with poorly regarded corporate-governance standards, such as Italy and Turkey, saw little change in the premium for cross-listing or an increase in the premium. That suggests investors in those countries viewed the additional benefit of meeting the post-2002 U.S. regulations equaled or outweighed the extra cost.

"These results suggest that the changes in the U.S. regulatory environment post-SOX decreased the benefit of a U.S. cross-listing, particularly for countries that have good governance standards," Mr. Zingales said. Because these are the countries the U.S. most resembles, the shares of U.S.-based companies have probably also paid a price, Mr. Zingales said. He cited a variety of factors in the shift in environment: the 2002 Sarbanes-Oxley statute, increased federal and state prosecution of white-collar wrongdoing, higher visibility of shareholder lawsuits and the decline in the number of Wall Street analysts covering companies that trade in the U.S.

The primary evidence offered by those who assert the U.S. is losing its edge in capital markets is the shrinking U.S. market share of initial public offerings by foreign companies, with much of the action moving to London.

The cause isn't clear. It may reflect the improving quality of foreign markets or the willingness of London markets to list risky companies that the U.S. won't list. Mr. Hubbard said Mr. Zingales's work suggests the cause is, in fact, excess U.S. regulation.

Others aren't so sure. Andrei Shleifer, an economics professor at Harvard University, called the decline in the foreign-listing premium "fascinating" but whether it is due to "improvements in corporate governance and the quality of stock markets abroad, or from the reduced benefits of U.S. listing, is still an open question."

Andrew Karolyi, a finance professor at Ohio State University who has also studied the cross-listing premium said Mr. Zingales's conclusion is "reasonable," but advised caution. Mr. Karolyi said in his own research he had been unable to relate a change in the cross-listing premium to corporate governance.