Dynamics of Cross-Border Equity Listing : Indian Evidence. (With Abstract)

This paper documents the impact of cross listing on the liquidity of underlying domestic shares and analyzes the post-listing performances. During 1992-2001, many Indian companies tapped the international capital markets with their equity offerings in the form of Depositary Receipts (DRs) and listed abroad, mainly in the European and the US stock exchanges. A sample of 26 Indian DR programs that were listed in foreign markets is used in the present study. At an aggregate level, there are no clear patterns for the changes in liquidity following the DR listings. The ADR listings in most cases reduce the liquidity of the domestic underlying shares whereas GDR listings in most cases increase the liquidity of the domestic underlying shares. Further, with respect to post-listing performances, cross listing in the US appears to pose a positive impact on dependent variablesnamely, total assets, foreign sales, total revenue and return on assets when compared to companies that cross list within Europe, in the sample under study.