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Does Foreign Market listing results into Greater Foreign Institutional Ownership and Better Market Co-Integration: Evidence from Indian Companies listed on New York Stock Exchange
It is believed that foreign listing of the securities enhances liquidity of a company‟s stock on account of greater capital market interaction between domestic country and the foreign country where the shares are traded. Greater capital market interaction can take place in two ways. First, companies...
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| Format: | Journal Article |
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Abhigyan
2011
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| Summary: | It is believed that foreign listing of the securities enhances liquidity of a company‟s stock on
account of greater capital market interaction between domestic country and the foreign
country where the shares are traded. Greater capital market interaction can take place in two
ways. First, companies may cross list in the foreign capital market as Global Depository
Receipts (GDRs) and American Depository Receipts (ADRs) and choose one of the foreign
stock exchanges as their primary listing exchange. Second, foreign institutional investors can
invest in these companies in market around the world. For present study, we have taken 10
reputed Indian companies which are listed on US stock exchange (NYSE). When companies
list on U.S exchanges, they have to follow the stock exchanges and SEC requirements on
disclosure. While there are many disclosure exemptions for foreign companies from the
domestic rules, the level of disclosure required is generally quite high. Managers of these
companies may voluntarily increase disclosure in domestic market to attract foreign
institutional investors. Thus we predict that foreign market listing increases domestic
voluntary disclosure which attract higher foreign institutional ownership and may result into
greater co-integration between share prices of these companies in domestic and foreign stock
exchanges. For the purpose of present study we have used Transparency and Disclosure
survey developed by Standard and Poor‟s. |
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| Physical Description: | Vol 29 No. 1 (April - June 2011) |