In this paper, we compare the value of foreign firms that are cross-listed on U.S. exchanges to that of U.S. firms. Strikingly, we document a “foreign firm discount”. Over the period 1989-2006, crosslisted firms had Tobin’s q ratios that were 14% lower than comparable U.S. companies. This valuation difference is highly significant, is presents across time, countries and sectors, and increases over the cross-listing life-time. Moreover, we find that the quality of home market institutions explain part of the discount, even though cross-listed firms bond to the U.S. regulatory and market environment. In addition, our estimates reveal that the discount is markedly lower when foreign firms have higher governance standards, attract the attention of U.S. institutional investors and financial analysts, are more transparent, visible and present in the U.S. product markets. We argue, and provide strong evidence, that the discounting of foreign firms is largely related to U.S. investor recognition and familiarity.