U.S. investors' perceptions of corporate control in Mexico: Evidence from sibling ADRs

Pinegar, J and Ravichandran, R (2003) U.S. investors' perceptions of corporate control in Mexico: Evidence from sibling ADRs. Journal of Financial and Quantitative Analysis, 38 (1). pp. 213-230.

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Abstract

We examine the relative prices of sibling American Depositary Receipts (ADRs). These ADRs are issued against classes of shares with different voting rights that are issued by the same foreign firm. Though superior and inferior voting siblings begin trading in the U.S. at nearly equal values, prices quickly separate. For non-Mexican issues, superior voting ADRs command a premium. For Mexican issues, superior voting shares trade at a discount. The Mexican discount is inconsistent with the benefits of U.S. listing discussed in other recent studies and cannot be explained by differences in cash flow rights, systematic risk, liquidity, voting control of major blockholders, or ownership restrictions. Our analysis suggests, however, that control for our Mexican firms has shifted to creditors and competitors, thus, eroding equity voting premiums.

ISB Creators:
ISB CreatorsORCiD
Ravichandran, RUNSPECIFIED
Item Type: Article
Subjects: Finance
Depositing User: LRC ISB
Date Deposited: 23 Oct 2014 05:51
Last Modified: 23 Oct 2014 05:53
URI: http://eprints.exchange.isb.edu/id/eprint/16
Publisher URL: http://dx.doi.org/10.2307/4126770
Publisher OA policy: http://www.sherpa.ac.uk/romeo/issn/0022-1090/
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