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The Effects of Market Segmentation and Investor Recognition on Asset Prices: Evidence from Foreign Stocks Listing in the United States

The Journal of finance (New York), 1999-06, Vol.54 (3), p.981-1013 [Peer Reviewed Journal]

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Title:
The Effects of Market Segmentation and Investor Recognition on Asset Prices: Evidence from Foreign Stocks Listing in the United States
Author: Foerster, Stephen R. ; Karolyi, G. Andrew
Subjects: American Depositary Receipts ; Capital markets ; Financial securities ; Impact analysis ; International finance ; Investors ; Liquidity ; Local markets ; Market segmentation ; Nasdaq Composite Index ; Rates of return ; Shareholders ; Stock exchanges ; Stock prices
Is Part Of: The Journal of finance (New York), 1999-06, Vol.54 (3), p.981-1013
Description: Non-U.S. firms cross-listing shares on U.S. exchanges as American Depositary Receipts earn cumulative abnormal returns of 19 percent during the year before listing, and an additional 1.20 percent during the listing week, but incur a loss of 14 percent during the year following listing. We show how these unusual share price changes are robust to changing market risk exposures and are related to an expansion of the shareholder base and to the amount of capital raised at the time of listing. Our tests provide support for the market segmentation hypothesis and Merton's (1987) investor recognition hypothesis.
Publisher: Boston, USA and Oxford, UK: Blackwell Publishers, Inc
Language: English
Identifier: ISSN: 0022-1082
EISSN: 1540-6261
DOI: 10.1111/0022-1082.00134
CODEN: JLFIAN
Source: Alma/SFX Local Collection

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