Does the Method of Entry Matter? Evidence from Indian Adr and Gdr Issues

Posted: 6 Jun 2006

See all articles by Madhu Kalimipalli

Madhu Kalimipalli

Lazaridis School of Business and Economics, Wilfrid Laurier University

Latha Ramchand

University of Houston

Abstract

This paper documents changes in volatility, returns, liquidity and valuation on the local market following different ADR issues, viz., Level I, II, III, Rule 144A and Regulation S offerings, by the Indian firms in the global market. The sample consists of 84 ADR and GDR issues made by the Indian firms during 1990-2001. The Rule 144A and Reg S issues experience a significant decline in volatility on the home (Indian) market and these effects are mainly observed during the first sub-period, 1990-1997. In addition, Level III ADRS, which are exchange listed and capital raising issues, experience a significant increase in liquidity on the home market and these occur in the second sub-period 1998-2001. Though ADRs in general experience an increase in valuation (as measured by the q ratios) after the U.S. issue, there is no strong evidence to suggest that the magnitude of increase depends on the method of entry.

Keywords: ADRS, GDRs, Rule 144A, Reg S, Volume, Volatility, Liquidity, q ratio

JEL Classification: G10, G14

Suggested Citation

Kalimipalli, Madhu and Ramchand, Latha, Does the Method of Entry Matter? Evidence from Indian Adr and Gdr Issues. Pacific-Basin Finance Journal, Forthcoming. Available at SSRN: https://ssrn.com/abstract=906137

Madhu Kalimipalli (Contact Author)

Lazaridis School of Business and Economics, Wilfrid Laurier University ( email )

Waterloo, Ontario N2L 3C5
Canada
519-884-0710 (Phone)

HOME PAGE: http://www.madhukalimipalli.com/

Latha Ramchand

University of Houston ( email )

Houston, TX 77204
United States
713-743-4769 (Phone)

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