Currency Market Timing and International Capital Structure: Evidence from ADR Issuances
ADR issuances represent one of the most important international capital structure decisions of firms. We study all ADR issuances in the U.S. stock market in the last 28 years. Using event study methodology and analyzing the likelihood of their occurrence, we provide statistically significant evidence of firms timing ability in currency markets. This result is especially significant for value companies, relatively small companies issuing relatively large amounts of ADRs, manufacturing companies, and emerging market compa- nies, during currency crises (when mispricings are rife) and after the integration of issuers local financial market with the world capital market, and when the ADR issue constitutes a portion of a companys IPO, regardless of the identity of the underwriting investment bank. Currency market timing is also economically significant since it translates into to- tal savings for the issuing firms of about $450 million (or 0.65％ of the total ADR issue volume). These findings are consistent with the market timing theory of (international) capital structure and suggest that some companies have private information about foreign exchange. Therefore, our results shed light on recent evidence on the order flow explaining and predicting exchange rate fluctuations (Evans and Lyons (2002), (2003), (2004a)).
Market Timing Exchange Rate ADR International Capital Structure of Firms
Paolo Pasquariello Kathy Yuan Qiaoqiao Zhu
Stephen M. Ross School of Business at the University of Michigan Economics Department at the University of Michigan
国际会议
西安
英文
1-55
2006-07-17（万方平台首次上网日期，不代表论文的发表时间）