Operating performance and stock returns of global depository receipt issuers from Taiwan
Journal
International Research Journal of Finance and Economics
Journal Volume
86
Pages
141-147
Date Issued
2012
Author(s)
Abstract
This paper analyzes the long-run operating performance and stock returns of global depositary receipt issuers from Taiwan. Our sample includes 54 Taiwanese firms that issued deposit receipts for the first time in the U.S., the U.K. and Luxemburg from 1992 to 2007. We find the long-run operating performance and stock returns of DR issuers deteriorate and under-perform their benchmarks after issue. These findings do not support the market segmentation hypothesis of cross-border listing, which predicts that the performance of DR issuers will improve in the post-issue period. Our findings are consistent with the prediction of capital structure decision models of Miller and Rock (1985), and Myers and Majluf (1984), as well as the window of opportunity hypothesis. The results suggest that firms time their DR issues during periods of relatively strong operating performance and future decline of operating performance of DR issuers is anticipated at the time of issue. © EuroJournals Publishing, Inc.
Subjects
Abnormal operating performance; Abnormal stock returns; Cross-border listing; DR issuers
Type
journal article