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Cross-listing and the long-term performance of ADRs: Revisiting European evidence

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  • Bancel, Franck
  • Kalimipalli, Madhu
  • Mittoo, Usha R.
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    Abstract

    In this paper, we examine several cross-listing theories employing a sample of over 250 European ADRs representing 19 countries during the 1970-2002 period. We find that, first, though both Levels II and III listings underperform over the 3 years subsequent to the US listing, the determinants of long-term performance are significantly different for the non-IPO and IPO firms. Second, there is a strong support for investor recognition in the non-IPO sample, for window-of-opportunity in the IPO sample, and for bonding in both samples, but little support for the market segmentation hypothesis. Overall, our results support the notion that different cross-listing theories are complementary and not mutually exclusive, in explaining the long-term performance.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of International Financial Markets, Institutions and Money.

    Volume (Year): 19 (2009)
    Issue (Month): 5 (December)
    Pages: 895-923

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    Handle: RePEc:eee:intfin:v:19:y:2009:i:5:p:895-923

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    Web page: http://www.elsevier.com/locate/intfin

    Related research

    Keywords: Long-run stock performance US listings European ADRs Capital raising ADRs Initial public offerings;

    References

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    Cited by:
    1. Wang, Daphne & Esqueda, Omar A., 2014. "National cultural effects on leverage decisions: Evidence from emerging-market ADRs," Research in International Business and Finance, Elsevier, vol. 31(C), pages 152-177.
    2. Thomas O'Connor, 2012. "Legal bonding, investor recognition, and cross-listing premia in emerging markets," Economics, Finance and Accounting Department Working Paper Series n226-12.pdf, Department of Economics, Finance and Accounting, National University of Ireland - Maynooth.

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