THE DECLINING MARKET REACTION TO ADR ISSUERS IN EMERGING MARKETS
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Current literature shows evidence ofthe gradual nature ofinternational market integration. This would suggest, at the company level, a general pattern of a declining marginal cost of capital effect for each subsequent firm issuing American Depositary Receipts from the same market. This study finds that the marginal listingfirm experiences a significantly smaller change in the cost ofcapital during listing than that o fprevious listing firms from the same market. A declining reaction found during the announcement period is not significant. The results are robust to changes in local and US market risks from period to period.
Abstract
Current literature shows evidence ofthe gradual nature ofinternational market integration. This would suggest, at the company level, a general pattern of a declining marginal cost of capital effect for each subsequent firm issuing American Depositary Receipts from the same market. This study finds that the marginal listingfirm experiences a significantly smaller change in the cost ofcapital during listing than that o fprevious listing firms from the same market. A declining reaction found during the announcement period is not significant. The results are robust to changes in local and US market risks from period to period.