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The Role of American Depositary Receipts in the Development of Emerging Markets

Alberto Moel ()

Economía Journal, 2001, vol. Volume 2 Number 1, issue Fall 2001, 209-274

Abstract: This paper finds that the growth and expansion of U.S. cross-listings by firms from emerging markets around the world facilitated an expansion of cross-border equity flows and overall development of their stock markets during the 1990s. However, these benefits have negative spillover effects; the capitalization and turnover ratios of local-market firms that do not pursue overseas listings decline as U.S. cross-listings in the form of American depositary receipts (ADRs) increase in size and scope. We investigate various possible sources of these negative spillovers and offer new evidence that the growth of ADRs neither facilitates nor hinders local-market development, but represent an outcome of poorly functioning local markets. Policy implications are discussed. Copyright (c) 2004 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Keywords: stock markets; spillover effects; American Depositary Receipts; Emerging Markets; Unites States (search for similar items in EconPapers)
JEL-codes: F21 F39 G15 (search for similar items in EconPapers)
Date: 2001
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