Market Segmentation and the Cost of Capital in International Equity Markets
Top Cited Papers
- 1 December 2000
- journal article
- Published by JSTOR in Journal of Financial and Quantitative Analysis
- Vol. 35 (4) , 577
- https://doi.org/10.2307/2676256
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
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