Cross-Listing and Operating Performance: Evidence from Exchange-Listed American Depositary Receipts

31 Pages Posted: 27 Apr 2009

See all articles by Andreas Charitou

Andreas Charitou

University of Cyprus

Christodoulos Louca

Cyprus University of Technology

Date Written: 2008-12

Abstract

In this paper we examine the operating performance of non-US firms that enter major US stock exchanges using American Depositary Receipt (ADR) programs. Our dataset consists of 108 capital-raising and non-capital-raising firms from twenty four countries, cross-listed on major US stock exchanges during the period 1994–2004. We provide evidence that capital-raising cross-listed firms experience improvements in their operating performance after the listing, relative to a non-cross-listed matched sample of firms and relative to the pre-listing period, whereas non-capital-raising cross-listed firms out-perform a non-cross-listed matched sample of firms for both the pre-listing and the post-listing periods. These results suggest that the type of ADR program conveys information about changes in the post-listing operating performance. Moreover, both capital-raising and non-capital-raising cross-listed firms have positive abnormal returns due to the cross-listing and these abnormal returns are positively related with the post-listing abnormal changes in operating performance, suggesting that the market anticipates the post-listing abnormal changes in operating performance. Results are robust after adjusting for various firm and country risk characteristics.

Suggested Citation

Charitou, Andreas and Louca, Christodoulos, Cross-Listing and Operating Performance: Evidence from Exchange-Listed American Depositary Receipts (2008-12). Journal of Business Finance & Accounting, Vol. 36, Issue 1-2, pp. 99-129, January/March 2009. Available at SSRN: https://ssrn.com/abstract=1394695 or http://dx.doi.org/10.1111/j.1468-5957.2009.02123.x

Andreas Charitou (Contact Author)

University of Cyprus ( email )

75 Kallipoleos Street
P.O. Box 20537
Nicosia CY-1678
Cyprus
+357 2 893624 (Phone)
+357 2 895030 (Fax)

Christodoulos Louca

Cyprus University of Technology ( email )

Limassol, 3603
Cyprus

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