The Effects of Market Segmentation and Investor Recognition on Asset Prices: Evidence from Foreign Stocks Listing in the U.S.

Foerster, Stephen R.; Karolyi, G. Andrew

doi:10.2139/ssrn.136713

Cited by 138 publications

(151 citation statements)

References 23 publications

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“…The estimate is significant at 5% level. The observed reduction in beta is consistent with the segmentation spanning hypothesis of Foerster and Karolyi (1999).…”

Section: Cross-listing and The Cost Of Equitysupporting

confidence: 87%

“…A decrease in our estimate of market risk may occur when the local country's market is segmented from the world market. Foerster and Karolyi (1999) suggest that cross-listing could allow the firm to span the segmentation. In our tests, we focus on the change in the cost of equity from before cross-listing to afterwards.…”

Section: Methods and Datamentioning

confidence: 99%

“…A negative incomplete information premium coefficient in the post listing period, a i POST , is consistent with our hypothesis. Lastly, Foerster and Karolyi (1999) and Errunza and Miller (2000) suggest that market segmentation can be partially overcome through cross-listing. Cross-listing firms are able to orient toward a more diversified market portfolio than their home equity market can provide.…”

Section: Cross-listing and The Cost Of Equitymentioning

confidence: 99%

“…Using a different sample and methods, Foerster and Karolyi (1999) in their Table VI report that ADRs exhibit an annualized mean abnormal return of 7.8% in the year prior to listing. They also find that for their sample the annualized abnormal return decreases to 0.52% in the year after listing in the US Given that our sample contains more emerging market firms than Karolyi (1999, 2000), our findings appear reasonable.…”

Section: Cross-listing and The Cost Of Equitymentioning

confidence: 99%

See 3 more Smart Citations

Disclosure and the cost of equity in international cross-listing

Eaton

Nofsinger

Weaver

2007

Rev Quant Finan Acc

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“…The estimate is significant at 5% level. The observed reduction in beta is consistent with the segmentation spanning hypothesis of Foerster and Karolyi (1999).…”

Section: Cross-listing and The Cost Of Equitysupporting

confidence: 87%

Section: Methods and Datamentioning

confidence: 99%

Section: Cross-listing and The Cost Of Equitymentioning

confidence: 99%

Section: Cross-listing and The Cost Of Equitymentioning

confidence: 99%

See 2 more Smart Citations

Disclosure and the cost of equity in international cross-listing

Eaton

Nofsinger

Weaver

2007

Rev Quant Finan Acc

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show abstract

“…or cost of equity, this would eventually make the investors to be reluctant to invest. Henceforth, the 1997 economic crisis, many discussions started to go to segmentation direction (Lam & Pak, 1993;Choi & Rajan, 1997, Domowitz, Glen, & Madhavan, 1997Foster & Karolyi, 1999). During the early 2000s, among the developing nations, the realization of the importance of foreign investors began to flourish.…”

Section: Introductionmentioning

confidence: 99%

A Proposal Study on Indonesian Capital Market Integration With Cheung and Lee (1993) Asset Pricing Modification

2013

CUBR

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Many studies claim that Indonesia capital market tends to be segmented. They both claim that due to weak correlation between stock returns in the Indonesian stock exchanges (formerly Jakarta stock exchange) with stock returns in other countries' stock exchanges, Indonesian capital market segmentation is justified. Their claims is further strengthened by such survey that not only claims that Indonesia market is segmented but also claims that Indonesian stock exchange is very attractive for foreign investors since this condition will bring the benefit of international diversification. Nevertheless, if further examined, the increase in foreign investor's activity in the IDX would cause the Indonesian Index (JCI) to be further influenced by the international factor carried by those foreign investors. This condition causes the segmentation of Indonesia capital market started to be questioned. Furthermore, some studies discover the co-integration phenomenon in the IDX post 1997 monetary crisis in East Asia. Next development is the occurrence of two major groups in capital market integration study. The first group is statistical perspectives who focuses on confirming the integration of capital market segmentation; while the other on seeking the determinants of capital market integration. For the second group, i.e., asset pricing perspectives has used ICAPM model to investigate the integration of segmentation of stock market. Some studies propose model which can be formulated such asWhile for this study, the author propose a modification model by extending some relevant variables as the determinant of integration or segmentation from the Indonesian capital market. Thus, the model was used in this study become into such empirical model as follows:

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Investing in Initial Public Offerings and Depository Receipts

Jithendranathan

2009

Investment Management

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The Effects of Market Segmentation and Investor Recognition on Asset Prices: Evidence from Foreign Stocks Listing in the U.S.

Cited by 138 publications

References 23 publications

Disclosure and the cost of equity in international cross-listing

Disclosure and the cost of equity in international cross-listing

A Proposal Study on Indonesian Capital Market Integration With Cheung and Lee (1993) Asset Pricing Modification

Investing in Initial Public Offerings and Depository Receipts

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