Author: Gordon Platt
Companies based in emerging market countries enjoy higher domestic share prices and improved home-market liquidity one year after opening a DR program, according to a study released in October by UK-based Oxford Metrica, an independent research firm.

Companies based in the big emerging market countries of Brazil, Russia, India and China gained the greatest benefit from starting a DR program, according to the study, which was sponsored by The Bank of New York Mellon, depositary for more than 1,270 DR programs from companies in 60 countries. The study covered all emerging market DR programs established since 1980, comprising 628 programs from 33 countries. It found that share prices rose on average by 20% and share liquidity in home markets improved by 40% in one year after listing a DR program on a US or European stock exchange.

Local-market share prices declined by 20% on average in one year for EM issuers that terminated programs traded in the over-the-counter market. For EM companies that upgraded their DR programs from OTC-traded to US or European exchange-listed, there was an average 60% increase in domestic share prices. “The research confirms that establishing a DR program has significant benefits for the shareholders of emerging market companies,” says Christopher Sturdy, executive vice president and head of The Bank of New York Mellon’s depositary receipt division.