Crises, Contagion and Cross-Listings

51 Pages Posted: 20 Jun 2007

See all articles by Nandini Chandar

Nandini Chandar

Drexel University - Department of Accounting and Tax

Dilip K. Patro


Ari Yezegel

Bentley University - Department of Accountancy

Date Written: June 11, 2007


We investigate whether cross listing shares in the form of depositary receipts in overseas markets benefits investors in emerging market countries. To test our hypotheses we analyze the differential stock price responses of cross-listed (CL) and non cross-listed (NCL) firms to financial crises in their home countries. Further, we also examine contagion effects - i.e., the differential CL and NCL firm reactions in countries in which contagion effects of a crisis originating in another country is speculated in the financial press. We study five significant crises events in Mexico, East Asian countries, Russia, Turkey and Argentina from 1994 to 2002. While our results vary across events, we generally find that CL firms react less negatively than NCL firms both during a crisis in the home country and due to contagion effects of crisis in another country. Our findings are consistent with prediction of models of international asset pricing suggesting that cross-listing overcomes some of the limitations of market segmentation. As such, cross-listing may partially insure investors in emerging market countries against unforeseen crises in their home countries and other emerging markets. We do not find evidence that foreign investors "panic" during a currency crisis.

Keywords: Contagion, Cross-Listings, Crisis, Emerging Markets

JEL Classification: G15

Suggested Citation

Chandar, Nandini and Patro, Dilip K. and Yezegel, Ari, Crises, Contagion and Cross-Listings (June 11, 2007). 20th Australasian Finance & Banking Conference 2007 Paper, Available at SSRN: or

Nandini Chandar (Contact Author)

Drexel University - Department of Accounting and Tax ( email )

Philadelphia, PA 19104
United States

Dilip K. Patro

OCC ( email )

400 7th Street SW
Washington, DC 20219
United States
202-649-5548 (Phone)

Ari Yezegel

Bentley University - Department of Accountancy ( email )

175 Forest Street
Waltham, MA 02452
United States
+1.781.891.2264 (Phone)

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