The US capital market is considered as the largest and most liquid market in the world. As summarized in the study of Hail and Leuz (2009), the advantage of cross-listing on US exchanges over other exchanges can be attributed to the following reasons. First, 4In this study, ‘financial market integration’ and ‘financial globalization’ are treated as interchangeable term. 17 outside investor protection is strengthened, which allows firms to raise external finance more easily (e.g. Reese and Weisbach, 2002; Benos and Weisbach, 2004; Doidge et al., 2004). Second, non-US firms must comply with SEC disclosure, helping to enhance the market transparency and hence lower the firm’s cost of capital (e.g. Verrecchia, 2001; Lambert et al., 2007). Last but not least, cross listing on the US exchanges increases investor awareness and expands the firm’s investor base (e.g. Merton, 1987; Foerster and Karolyi, 1999). Given above merits, numerous non-US companies have chosen to cross list their shares on the US markets, typically in the form of American Depositary Receipt (ADR, hereafter). ADR is viewed as a convenient and cost-effective way for non-US companies to tap into the wealth US markets. Specifically, ADRs are negotiable certificates issued by a US depositary bank, which represent a specified number of foreign shares physically deposited in the US bank’s overseas branch or custodian. ADRs are traded, cleared and settled like any other US securities. From US investors’ perspective, ADRs provide an alternative to invest in foreign equities without the complexities associated with directly owning foreign stocks. Questions may be raised that are ADRs good substitute for their underlying foreign stocks; can investors seeking international expos... ... middle of paper ... ...lass with different risk-return characteristics. Second, a great deal of attention has been paid to ADRs from developed countries, whereas studies on emerging markets remain insufficient. It is hard to draw inferences from these studies in that their findings may be limited to a specific market. In order to better understand emerging market ADRs in a broad way, a more comprehensive analysis should be carried out in typical emerging markets. Finally, emerging markets have played an increasingly important role in the world economies and investors’ portfolio strategies. According to Bekaert and Harvey (2013), as of 2012, emerging markets accounted for over 30% of world GDP, increased from 15% in 1987. Among other, China accounted for about 13%. Brazil, Russia and India also feature in the top 10 in terms of contribution to the global GDP. Please refer to Table 1.1 below.
Ross, S.A., Westerfield, R.W., Jaffe, J.F., & Roberts, G.S (2001) Corporate Finance. 3 th ed.Toronto, McGraw-Hill Ryerson.
Shmoop Editorial Team. "The Market Revolution Summary & Analysis." Shmoop University, Inc. Shmoop.com, 11 Nov. 2008. Web. 4 Nov. 2011. .
The threat of online competitors is also present to every discount broker that has not switched to online trading or chooses to remain with their current business model and not offer online services. These online trading sites have unique trading capabilities that otherwise are not present at Edward Jones. They offer sound advice on stocks and other investments instantly. Each customer has to call their Edward Jones advisor in order to place a trade. This makes sense to Edward Jones because they want to help prevent the rash decisio...
The large-scale multinational financial giants are probably represented by the renowned investment banks such as Goldman Sachs, UBS, D...
What if a U.S. investor did not elect to have his investment in a Passive foreign investment company (PFIC) treated as a “Qualified Electing Fund” (QEF)? This seemingly small issue actually has huge financial consequences for the taxpayer. This paper will first explain what a Passive foreign investment company is and the liabilities of what that entails. Secondly, the what is an Excess Distribution Regime, and how this is a huge is advantage to the taxpayer. The Excessive Distribution regime is used when the qualified electing fund election was not elected in time. Then I will discuss what a qualified electing fund is and the benefits of electing it. Lastly what it is important for the taxpayer to make the
There are only a handful of stock market exchange sites such as; the American Stock Exchange (AMEX), the New York Stock Exchange (NYSE), and the National Association of Securities Dealers Automated Quotations (NASDAQ). Each site has several similarities as well as differences. An essential difference between the exchange sites is their trading principles. The NYSE was founded in 1792, and has more of an auction market; whereas NASDAQ was founded in 1971, and is more of a dealer market. (Weinburg,
As a result, the number of foreign companies established in Mexico has risen to more than 16,000. The opportunities for investors are numerous, particularly in sectors such as automotive, electronics, information and communication technology, agribusiness, chemicals and pharmaceuticals, biotechnology, financial services, water and power generation. As part of the Mexican government’s campaign to attract FDI, the 44 overseas offices of the Mexican Bank for Foreign Trade (Bancomext) operate as trade commissions that offer advice and assistance to potential investors.
A generation ago, it was generally believed that security markets were efficient in adjusting information about individual stocks and stock market as a whole (Malkiel, (2003)). However, we cannot deny the efficient market hypothesis has several paradoxes.
Howells, Peter., Bain, Keith 2000, Financial Markets and Institutions, 3rd edn, Henry King Ltd., Great Britain.
...ries such as Spain, Belgium, UK, Japan, and China. Future growth can be obtained through positioning current brands in those emerging markets.
Although the origin of the GFC might have been the housing and financial crisis in the US, it affected both developed and developing countries in a devastating way. More specifically, the crisis has destroyed global financial systems and government budges, strike the confident and security of financial markets. It was universally recognized the worst global economic downturn since the Great Depression in the 1930s (Ciro, 2012). Before the financial crisis, the increasing food and oil prices had affected the non-producers and because of the developed economies are more integrated within the global financial systems and markets, they were the worst affected by the GFC in the short term. Developing countries were looking more optimistic in the short term as their economies were not as integrated into the global financial market system. Nevertheless, the escalated impact of the crisis did affect the real economy of developing countries especially on the export-orientated nations. As the demand of goods and services has been weakening from the developed countries, the output of manufacturing or services companies decreas...
The BRICS “has come to symbolize the growing power of the world’s largest emerging e...
Globalization encourages worldwide business. Globalization is an efficient process by which all the nations of world will commonly try to set regular universal standards & regulations (both created & recommended) which will encourage business around different nations. Business around nations or elements crosswise over different fringes is called universal business.
The biggest stock exchanges are the New York Stock Exchange and NASDAQ. The New York Stock Exchange is a large building in Lower Manhattan that does auction-style trading with a lot of face to face interaction through specialists, brokers, and buyers. There are upper floors in this exchange on which specialists determine the prices of all the stocks. This information then travels to the brokers who work auctions face to face with buyers in order to sell the stocks. America’s biggest companies, like Coca-Cola and McDonald’s, sell their stocks through this exchange. NASDAQ is a virtual stock exchange with no physical building. This exchange was created during the 1970s but began thriving during the tech boom of the 1990s. The tech boom helped this exchange become the home of more technological companies li...
Globalization has been a start of a new modernized era in history. The source states that as an individual you are given prosperity, stability, and also predictability, and also points out that it helps developing countries modernize and catch up with developed countries, and also reduce poverty since new businesses are formed allowing more employment in the country due to the subsidies that wealthier countries give to them. The person who wrote this source is a pro globalist, and has probably experienced the prosperity that was given to them because of the global trading system. His perspective on globalization suggests that globalization is the key to advancing technology, good relations between countries, and is beneficial event in history. One should embrace the global economy as it creates many roads to achieve your goals in your life, and also for the weaker countries that needs support, but to a degree that the government can intervene with the market.