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| The long-run performance of global equity offerings |
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| Author(s): Foerster SR, Karolyi GA |
| Source: JOURNAL OF FINANCIAL AND QUANTITATIVE ANALYSIS Volume: 35 Issue: 4 Pages: 499-528 Published: DEC 2000 |
| Times Cited: 20 References: 55 |
| Abstract: We investigate the long-run return performance of non-U.S. firms that raise equity capital in U.S. markets. Overall, between 1982 and 1996, our sample of 333 global equity offerings with U.S. depositary receipt (ADR) tranches from 35 countries in Asia, Latin America, and Europe under-perform local market benchmarks of comparable firms by 8%-15% over the three years following issuance. We show that differences in long-run returns are related to the scope and magnitude of investment barriers that induce segmentation of capital markets around the world. While companies from markets with significant investment barriers for foreigners that issue equity on major U.S. exchanges outperform their benchmarks, those from segmented markets that issue equity in the U.S. by way of Rule 144A private placements significantly under-perform. We also show that inter-market competition for order flow in the post-issuance period affects long-run return performance. Post-issuance buy-and-hold abnormal returns are most significantly and positively related to the offering's ability to generate a larger share of U.S. trading volume. |
| Document Type: Article |
| Language: English |
| Reprint Address: Karolyi, GA (reprint author), Ohio State Univ, Fisher Coll Business, Columbus, OH 43210 USA |
Addresses:
1. Ohio State Univ, Fisher Coll Business, Columbus, OH 43210 USA
2. Univ Western Ontario, Richard Ivey Sch Business, London, ON N6A 3K7 Canada |
| Publisher: UNIV WASHINGTON SCH BUSINESS & ADMINISTRATION, C/O OFFICE MANAGER, 115 LEWIS HALL, BOX 353200, SEATTLE, WA 98195-3200 USA |
| Subject Category: Business, Finance; Economics |
| IDS Number: 383EZ |
| ISSN: 0022-1090 |
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| | | | | | | | | Record from Web of Science® | | | | | | | | | |