Determinants of choice of depositary receipt programs: an exploratory study

Purpose – The purpose of this paper is to perform an exploratory study of depositary receipts (DRs). In addition to the geographical analysis it test several hypothesis linked to various DRs’ issues. Design/methodology/approach – Using the publicly available The Bank of New York's (now The Bank of New York Mellon) database, descriptive statistics and logit analysis were applied. Findings – It is evident that smaller firms issue DRs in lower level programs apparently due to the considerable cost barriers; firms with larger capital expenditure plans prefer to issue under level III or Rule 144A DR programs and higher quality firms, proxied by lower leverage, are likely to make higher-level DR issues. Research limitations/implications – The database is updated quite frequently and departures from enclosed findings are likely to occur in the years to come. Practical implications – Management interested in issuing DRs may become acquainted with the pattern exercised by both small and large companies, or by companies with specific capital structures. In this manner the listing demonstrates less uncertainty as long as it is possible for managers to ascertain and compare own companies’ features. Originality/value – The paper adds to the current literature regarding in-depth analysis of the DRs market.