DaimlerChrysler AG, the First Truly Global Share

Abstract:     
On November 17, 1998, trading commenced in DaimlerChrysler AG ordinary shares, a single global registered share (GRS) certificate, on stock exchanges around the world. The GRS quotes, trades and settles in U.S. dollars on the New York Stock Exchange and in deutschmarks/euros on the Deutsche Borse through a new global share registrar linking German and U.S. registrars and clearing facilities. This clinical study documents how almost 95 percent of its order flow migrated back to Germany within the first six months of trading and that the share price underperformed market- and sector-specific benchmarks by up to 10 percent. I analyze this event as an interesting test of different hypotheses about multi-market trading, global competition for order flow and liquidity. Overall, I argue that the choice of the share facility, whether a global share or traditional ADR program, cannot explain DaimlerChrysler's flowback and poor share price performance.

Number of Pages in PDF File: 46

JEL Classification: F30, G32, G15

working papers series