International Equity Markets
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Raising Capital in the Global Economy
Case Assignment Background
Despite the global financial crisis foreign companies tend to find it worthwhile to have their shares listed on one of the American stock exchanges. Having a listing brings access to more capital as well as increased prestige. However, there are many hurdles and difficulties involved in getting a foreign company listed on an American stock exchange.
Do your own research on world stock markets. Discuss the following issues:
1. Is raising money in U.S. stock markets more - or less - difficult than in the rest of the world?
2. Is it generally worthwhile for a non-US company to get listed on a U.S. exchange? What are the advantages? How this is done? What are ADR's?
3. Is it a good move for a U.S. corporation to list its stock on foreign stock exchanges? What are the possible advantages and disadvantages of such a move?
Expectations:
The response should detail the issues facing a foreign company wishing to have its shares listed on an American stock exchange and the advantages/disadvantages of US company wishing to list its shares on another country's stock exchange.
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1. It's harder to raise money in U.S. stock markets because:
-American investors may be unwittingly underwriting military and espionage activities of foreign governments through their investments in foreign entities.
- Legislation to report and disclosure requirements of all foreign governments and government-controlled firms seeking to raise money on U.S. capital markets is very complicated
- Meeting the American standard's of SEC's financial reporting requirements for foreign requirements for foreign issuers.
- Foreign issuers have to provide quantitative U.S. GAAP reconciliations
- Foreign issuers have to meet recent regulatory developments
2. Yes, it's worthwhile, US is the country with the strongest economy in the world.
ADR: American Depository Receipts- One of the more popular means utilized by foreign private issuers in recent years to create a market for their securities and to raise capital in the United States has been the issuance of American Depositary Receipts (ADRs). ADRs are negotiable certificates issued by a United States bank or ...
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