Market Segmentation and the Cost of Capital in International Equity Markets
Preprint
- 1 January 1998
- preprint
- Published by Elsevier in SSRN Electronic Journal
Abstract
While theoretical models predict a decrease in the cost of capital from depositary receipt offerings, the economic benefits of this liberalization have been difficult to quantify. Using a sample of 126 firms from 32 countries, we document a significant decline of 42% in the cost of capital. In addition, we show the decline is driven by the ability of U.S. investors to span the foreign security prior to cross-listing. Our findings support the hypothesis that financial market liberalizations have significant economic benefits.Keywords
This publication has 34 references indexed in Scilit:
- When an Event is Not an Event: The Curious Case of an Emerging MarketSSRN Electronic Journal, 1999
- Foreign Speculators and Emerging Equity MarketsPublished by National Bureau of Economic Research ,1997
- A Theory of Overconfidence, Self-Attribution, and Security Market Under- and Over-reactionsSSRN Electronic Journal, 1997
- Detecting abnormal operating performance: The empirical power and specification of test statisticsJournal of Financial Economics, 1996
- Diversification, Integration and Emerging Market Closed-End FundsThe Journal of Finance, 1996
- An Intertemporal Model of International Capital Market SegmentationJournal of Financial and Quantitative Analysis, 1996
- Time‐Varying World Market IntegrationThe Journal of Finance, 1995
- Long-Term Market Overreaction or Biases in Computed Returns?The Journal of Finance, 1993
- Global financial markets and the risk premium on U.S. equityJournal of Financial Economics, 1992
- International Listings and Stock Returns: Some Empirical EvidenceJournal of Financial and Quantitative Analysis, 1988