The Long-Run Performance of Global Equity Offerings
Dice Working Paper No. 99-4
45 Pages Posted: 5 Oct 1999
There are 3 versions of this paper
The Long-Run Performance of Global Equity Offerings
The Long-Run Performance of Global Equity Offerings
Date Written: April 1999
Abstract
This study investigates the long-run return performance of non-U.S. firms that raise equity capital in U.S. markets. Overall, 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 and global benchmarks by 8% to 39% 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. Specifically, companies from emerging markets and those that issue equity by way of Rule 144A private placements significantly underperform publicly-listed issues and those of companies in developed markets. We also show that inter-market competition for order flow in the post-issuance period affects their long-run return performance. Post-issuance cumulative abnormal returns are most significantly and positively related to the ability of the offering to generate a larger share of U.S. trading volume.
JEL Classification: F30, G32, G15
Suggested Citation: Suggested Citation
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