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Information leakage of ADRs Prior to company issued guidance

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  • Agapova, Anna
  • Madura, Jeff
  • Volkov, Nikanor

Abstract

We examine whether the degree of selective disclosure (as measured by information leakage prior to managerial earnings guidance) of foreign firms with ADRs is different from that of U.S. firms. We find that there is no variation of leakage before earning guidance between ADRs and U.S. firms. This result is consistent with the prediction that, despite being exempt from Regulation FD, ADRs have sufficient incentives to avoid selective disclosure even without the regulatory enforcement. In addition, we attempt to determine whether the variation in selective disclosure among the foreign firms with ADRs is conditioned on the respective home country transparency and governance standards. We find that country-specific characteristics, such as corruption perception, economic freedom and the legal system origin, explain the variation in information leakage of ADRs.

Suggested Citation

  • Agapova, Anna & Madura, Jeff & Volkov, Nikanor, 2020. "Information leakage of ADRs Prior to company issued guidance," Research in International Business and Finance, Elsevier, vol. 54(C).
  • Handle: RePEc:eee:riibaf:v:54:y:2020:i:c:s0275531920300581
    DOI: 10.1016/j.ribaf.2020.101304
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    More about this item

    Keywords

    ADR; Information leakage; Management guidance; Regulation;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading

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