International Cross-Listings and Subsequent Security-Market Choices: Evidence from ADRs

Abstract

We study the link between the attributes of ADR-listed firms and their post-listing security-market choices. We find that developed market firms are more likely to issue equity and debt than their emerging market counterparts. Moreover, we find that large firms are more likely to issue debt and less likely to issue equity. When we examine locations where ADR firms raise their capital, we find that firms originating from countries where the protection of minority shareholders is weak are more likely to issue debt on their home markets and less likely to issue debt on international markets (excluding U.S. markets). Moreover, ADR firms originating from developed (emerging market) countries are more (less) likely to issue their equity on their domestic markets and less (more) likely to issue equity on international markets (excluding U.S. markets).

Keywords: Cross-listing, financing, equity, debt, Sarbanes-Oxley

JEL Classification: G15, G32, G34, K00