The Market for ADRs : Does Depositary Bank Reputation Matter?

This paper analyzes whether the reputation of depositary banks that sponsor U.S. cross-listed firms has an impact on: (1) the number of new issuers every year, (2) the stock price reaction around the listing date (3) the percentage of institutional ownership, and (4) the activity of raising capital. Using a total of 676 ADRs, from 45 different countries, issued between 1962 and 2003, I find a positive and significant relation between depositary bank reputation and the market share of new listings. The results of the event-study show a positive relation between depositary bank reputation and average abnormal returns estimated for the week of listing. I also find evidence that issuers sponsored by more reputable depositary banks tend to have higher levels of institutional ownership. No statistical significant relation is found between depositary bank reputation and capital raisings