The IUP Journal of Applied Finance
International Listing of Depository Receipts and Shareholder Value

Article Details
Pub. Date : April, 2021
Product Name : The IUP Journal of Applied Finance
Product Type : Article
Product Code : IJAF20421
Author Name : Rajeev Kumar
Availability : YES
Subject/Domain : Finance
Download Format : PDF Format
No. of Pages : 37



Indian companies have been permitted to raise funds by the issue of Depository Receipts (DRs). These DRs are issued in the international capital markets. The DRs as issued by the Indian companies are listed on the leading global stock exchanges like the Nasdaq, the New York Stock Exchange (NYSE), London Stock Exchange and the Luxembourg Stock Exchange. 72 Indian companies have listed their 85 DRs on the foreign capital markets between May 1992 and June 2001. Due to the enhanced interest in the DR programs by the Indian companies and the subsequent listing on international exchanges, the need to study this topic arises. Many Indian companies that have shown keen interest to issue DRs and list on international stock exchanges. In this paper, an attempt has been made to understand the impact of international listing of American Depository Receipts/Global Depository Receipts (ADRs/GDRs) as issued by the Indian companies on their shareholder value in the domestic capital market by using event study instead of analysis methodology.


Depository Receipts (DRs) are issued by the companies to access funds from the international capital markets. A DR is a negotiable certificate issued by a depository bank for a number of non-US securities as are held by the depository custodian in the home market of the non-US company (Miller, 1999). A DR is a negotiable certificate evidencing the number of depository shares. The depository shares in turn represent a fixed number of home market securities (Saudagaran and Das, 1998).

DRs issued and/or listed in the US are known as American Depository Receipts (ADRs). DRs issued and listed in more than one capital market (which may or may not include US markets) are known as Global Depository Receipts (GDRs). Broadly, there are three variants of DRs: ADRs, GDRs and the International Depository Receipts (IDRs). Since past few years, a few variants of GDRs have evolved. These are the European Depository Receipts (EDRs), Singapore Depository Receipts (SDRs) and the Hong Kong Depository Receipts (HDRs).


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