International Cross-Listings and Subsequent Security-Market Choices: Evidence from ADRs
We would like to thank François Leroux, Nathan Mauck, Iwan Meier, Usha Mittoo, Sergei Sarkissian, Robert Van Ness (the editor), and two anonymous reviewers for very helpful comments and suggestions. We also received valuable comments from participants at the 2009 Financial Management Association Conference and the 2010 IFM2 Mathematical Finance Days. We are indebted to Chloé Jacob and Andreea Strachinescu for excellent research assistance. We gratefully acknowledge the financial support of the Social Sciences and Humanities Research Council of Canada, and l’Institut de Finance Mathématique de Montréal (IFM2).
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We study the link between the attributes of American depositary receipt (ADR)-listed firms and their post-listing security-market choices. We find that developed market firms are more likely to issue equity and debt than their emerging market counterparts. Furthermore, we find that large firms are more likely to issue debt and less likely to issue equity. When we examine locations where ADR firms raise their capital, we find that firms originating from countries where the protection of minority shareholders is weak are more likely to issue debt on their home markets and less likely to issue debt on international markets (excluding U.S. markets). Furthermore, ADR firms originating from developed (emerging market) countries are more (less) likely to issue their equity on their domestic markets and less (more) likely to issue equity on international markets (excluding U.S. markets).