What do studies find on deviations from price parity

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Question - In an integrated global equity market, cross-listed stocks and their domestic-market counterparts should have the same price if they are simultaneously bought and sold in order to profit from discrepancies in their pricing relations. Do some research on ADR mispricing and answer the following questions:

a. What do studies find on deviations from price parity between stocks cross-listed in the US in the form of ADRs and their domestic counterparts? Do regions and time zones play important roles in ADR mispricing?

b. What are the identified factors (e.g. information environment, liquidity, policy changes etc.) that could possibly influence the price deviations? Are ADR types important? What methods are commonly used in the empirical analysis?

Reference no: EM133273680

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