In an attempt to make U.S. financial markets more attractive for foreign firms, a new Securities and Exchange Commission deregulation effort post-Sarbanes-Oxley has had the opposite effect. The outcome has been that one of the historically-rarest type of cross-listing is now the most prevalent, courtesy of depositary banks creating unsponsored American deposit receipts (ADRs). New research by Finance’s Caruth Chair Darius Miller of SMU Cox and co-authors reveals that the majority of foreign firms are now trading on Over-The-Counter (OTC) markets rather than major exchanges, to their detriment.
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