The Impact of Local Sector Information on the Performance of Single Listed Foreign Stocks
International Journal of Economics, Finance and Management Sciences
Volume 7, Issue 5, October 2019, Pages: 142-161
Received: Jul. 25, 2019; Accepted: Aug. 27, 2019; Published: Oct. 23, 2019
Views 27      Downloads 9
Muhammad Shirajul Islam, IPE Capital Limited, Dhaka, Bangladesh
Article Tools
Follow on us
Being an instrument for international diversification, the populations of Single listed foreign stocks are growing in major capital markets. Since this is a new trend of foreign listing, both investors and issuers may have concerns about the characteristics of these stocks. This paper focuses on thesetypes of stocks from two different sectors (HealthCare and Technology) which are originated from PRC (Peoples Republic of China) and listed only on the US markets. The sample employs 24 companies’ stock returns in the period of May 2011 to August 2013. Correlation test and Granger causality test are applied to identify the relationships and beyond that, the Bivariate Co-integration test and Impulse Response Function test are applied to identify the nature of the relationships between the stocks and both the home and the US market (Sector Index). The study reveals that these single listed stocks do not have any long term effect from both the Home and the Foreign trading markets whereas, the stocks are highly responsive towards the shocks from US markets in a very short term.
Single Listed Stocks, Foreign Stocks, Foreign Listing, Local Sector Information, Home Market, Foreign Market
To cite this article
Muhammad Shirajul Islam, The Impact of Local Sector Information on the Performance of Single Listed Foreign Stocks, International Journal of Economics, Finance and Management Sciences. Vol. 7, No. 5, 2019, pp. 142-161. doi: 10.11648/j.ijefm.20190705.11
Copyright © 2019 Authors retain the copyright of this article.
This article is an open access article distributed under the Creative Commons Attribution License ( which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
Raising Equity Finance. (2003). Henley Manager Update, 14 (4), 36.
Geddes, R. (2003). IPOs and Equity Offerings. Jordan Hill, GBR: Butterworth-Heinemann.
Bell, R. G., Moore, C. B., & Al-Shammari, H. A. (2008). Country of Origin and Foreign IPO Legitimacy: Understanding the Role of Geographic Scope and Insider Ownership. Entrepreneurship: Theory & Practice, 32 (1), 185-202. doi: 10.1111/j.1540-6520.2007.00221.x.
Rath, S. (2007). Execution costs of dual listed Australian stocks. Applied Financial Economics, 17 (5), 379-389. doi: 10.1080/09603100600606149.
Minho, K., Szakmary, A. C., & Mathur, I. (2000). Price transmission dynamics between ADRs and their underlying foreign securities. Journal of Banking & Finance, 24 (8), 1359-1382.
Al-Tamimi, K. A. M. d. (2012). Possibilities for Portfolio Investment and Diversification: Could India become a Destination for Arab Investments? International Research Journal of Finance &Economics (91), 147-155.
Bell, R. G., Moore, C. B., &Filatotchev, I. (2012). Strategic and institutional effects on foreign IPO performance: Examining the impact of country of origin, corporate governance, and host country effects. Journal of Business Venturing, 27 (2), 197-216. doi: 10.1016/j.jbusvent.2010.11.001.
Bodurtha, J. N., Kim, D. S., & Lee, C. M. (1995). Closed-end country funds and US market sentiment. Review of Financial Studies, 8 (3), 879-918.
Mak, B. S. C., & Ngai, A. M. S. (2005). Market Linkage for Dual-Listed Chinese Stocks. Chinese Economy, 38 (2), 88-107.
Kalev, P. S., Nguyen, A. H., & Oh, N. Y. (2008). Foreign versus local investors: Who knows more? Who makes more? Journal of Banking & Finance, 32 (11), 2376-2389. doi: 10.1016/j.jbankfin.2007.12.031.
Xu, X. E., & Fung, H. (2002). Information Flows across Markets: Evidence from China–Backed Stocks Dual–Listed in Hong Kong and New York. Financial Review, 37 (4), 563-588.
In search of foreign exposure. (2006). Dow Theory Forecasts, 62 (52), 1-5.
Tapping into overseas growth. (2007). Dow Theory Forecasts, 63 (28), 1-5.
Francis, B., Hasan, I., & Feng, L. (2001). Underpricing of Foreign and Domestic IPOs in the U.S. Market: Empirical Evidence. Financial Markets, Institutions & Instruments, 10 (1), 1.
Chen, H.-L., & Chow, E. H. (2011). The impact of investor base on the costs of capital for IPOs. Journal of Multinational Financial Management, 21 (3), 177-190. doi: 10.1016/j.mulfin.2011.02.003.
Deutsche Bank AG. (February, 2009). Stock returns and trade locations: Evidence from the single listed ADR market. Retrieve from
Meric, I., Prober, L. M., Gong, L., &Meric, G. (2011). Co-Movements of Global Stock Markets Before and After the 2008 Stock Market Crash. International Research Journal of Finance & Economics (74), 68-83.
Cheung, C. S., &Miu, P. C. (2011). Correlation Behavior of Emerging Markets. In J. W. Kensinger (Ed.), Research in Finance (pp. 283-310): Research in Finance series, vol. 27. Bingley, U.K.: Emerald.
Narayan, P., Smyth, R., &Nandha, M. (2004). Interdependence and dynamic linkages between the emerging stock markets of South Asia. Accounting & Finance, 44 (3), 419-439.
Singh, G. S. P. (2011). Chinese and Indian Stock Market Linkages with Developed Stock Markets. Asian Journal of Finance & Accounting, 2 (2).
Seiler, M. J. (2004). Performing financial studies. Prentice Hall.
Haroon, H., Yasir, H. R., Azeem, S. S. W., & Ahmed, F. (2012). International Portfolio Diversification in Developing Equity Markets of South Asia. Studies in Business & Economics, 7 (1), 80-100.
Koop, G. (2006). Analysis of economic data. Wiley & Sons Ltd.
Oh, W., & Lee, K. (2004). Causal relationship between energy consumption and GDP revisited: the case of Korea 1970–1999. Energy economics, 26 (1), 51-59.
Naka, A., &Tufte, D. (1997). Examining impulse response functions in cointegrated systems. Applied Economics, 29 (12), 1593-1603.
Science Publishing Group
1 Rockefeller Plaza,
10th and 11th Floors,
New York, NY 10020
Tel: (001)347-983-5186