Is there a Cross Listing Premium for Non-Exchange Traded Depositary Receipts?
O'Connor, Thomas .G. (2009) Is there a Cross Listing Premium for Non-Exchange Traded Depositary Receipts? International Research Journal of Finance and Economics (25). pp. 183-202. ISSN 1450-2887
In this paper, I examine the valuation effects of trading in the U.S. as non-exchange issues i.e. Level 1 and 144 firms for non-U.S. firms. The study is motivated by two facts; first, while the number of new Level 2/3 issues has fallen 2001, Level 1 issues have remained an attractive listing option for non-U.S. firms. Second, while on theoretical grounds, firms from low-disclosure regimes have most to gain from exchange listing; these firms tend to list in the U.S. as non-exchange issues. Here, I examine whether the continuing attractiveness of, and the tendency of firms to choose a Level 1/144a listing is value enhancing. My results suggest that the tendency on the part of firms from lowdisclosure regimes to choose non-exchange issues is justified. Relative to their highdisclosure peers, these firms tend to gain most from trading in the U.S. However, for Rule 144a issues, the valuation gains are short-lived.
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