yale school of management 1 emerging market finance: lecture 12: why listing overseas?
TRANSCRIPT
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Why Listing Overseas?Raising capital at lower costs of capital
More liquid and deeper foreign markets Larger investor base (willing to pay more)
Increased visibility for products and brand
More press coverage at home after foreign listing More press coverage in country of listing
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Why Listing Overseas (cont.)
Employee motivation
Employee stock options for foreign employees
Better recognition by foreign employees
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Growth in Global Investing Vehicles
0200400600800
1000120014001600
1991
1992
1993
1994
1995
1996
1997
1998
Total Private DRs Public DRs
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
1992 1993 1994 1995 1996 1997 1998S
ha
res
(m
illio
ns
)
• ADRs comprise 11% of US trading in 200`• 1998 US$ volume in Telebras ($81b), Ericsson ($31b), Nokia ($28b), Telemex ($24b)• Over 50 DRs with US$ volume over $2b in 1998• DCX is new global share certificate; NYSE proposal for 12 more issues in 1999
US-based ADR Trading Total Number of ADR Listings
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What has been the experience with overseas listing?Well, depends on country and industry!
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此处加入其它页 (东方航空公司, Telmex, 等例子)
China Eastern Airlines on NYSE
昨天的交易量Trading volume
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Factor 1:
Frequency of news announcements, and/or media appearance
Explaining Differences in Foreign Listing Experience
Yale School of ManagementWhereas by mid-day today, there are 14 news
items on IBM, 6 of which from IBM
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Research shows
The more frequent a company’s name shows in media, the higher its stock trading volume and its P/E.
Ads have similar effect
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Explaining Difference in Foreign Listing Experience
Factor 2: firms with more products sold overseas will be more likely to succeed
Examples: Infosys, Sony, Daimler Benz, General Motors
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Factor 3: Culture and Proximity
Canadian firms like to list on NYSE and NASDAQ, and enjoy good valuations
Telmex has high trading volume and good valuation
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Big Hurdles for Foreign Stocks
In Finland, Swedish-speaking investors invest more in firms with Swedish-speaking CEOs. ==== Cultural bias(Grinblatt & Keloharju 1997)
Investors’ local bias: prefer local stocks
(Coval & Moskowitz 1999, Huberman 2001)
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Investors’ home country bias
2%
13. 30%21. 50%
15%
0%
20%
40%
60%
80%
100%
U. S. J apan UK Germany
Amount invested in foreign stocks by individual investors
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Example: P/E Ratios for Chinese Firms:where do they get higher valuation?
60.4
22.6 22.5
5.8
0
25
50
75
Shanghai Hong Kong New York Singapore
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Factor 4: Company SizeLarge firms find it easier to get high valuation and
high liquidity overseas
Saudagaran (1988)
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Factor 5: Foreign Exposure
Firms with more foreign employees find it easier to list overseas and enjoy high valuation