Workshop Series: Oksana Kim
Abstract The study contributes to the cross-listing literature and examines the impact of cross-listing via an American Depository Receipt (ADR) or a Global Depository Receipt (GDR) program on the cost of equity capital. The study covers a global sample of firms that were cross-listed as ADRs on NYSE, NASDAQ and AMEX, or GDRs on the London Stock Exchange (LSE). Using the implied cost of capital models that are based on the 1 realized accounting earnings (O'Hanlon and Steele 2000 - OHS) and 2 analysts'predictions (Easton et al. 2002 - ETSS) and asset-pricing models (Fama and French 1993), the study finds that the cost of capital declines for both ADRs and GDRs. This result holds across both methodological approaches to estimating the cost of capital. Consistent with this decline being due to information risk reduction, I find some evidence that it varies as a function of the quality of the disclosed information. The findings of the study will enhance our understanding of why firms chose to cross-list as ADRs or GDRs, provide insights into the impact of information risk on the cost of capital and have practical implications for exchanges that consider accommodating depository receipts programs, such as Dubai, Singapore, and Hong Kong. Join our staff, students and alumni attending workshops presented by visiting academics on their area of research expertise.
Oksana Kim is a PhD student at the University of Melbourne, Department of Accounting and Business Information Systems (ABIS). Her research interest is in international capital markets and cross-listing in particular. Prior to joining the PhD program she was working as an audit senior at Ernst & Young, Moscow (Russia). She also holds a Master's degree (Public Affairs) from Indiana University, School of Public and Environmental Affairs, and a Bachelor's degree (Hons) from Moscow State University of Technology.