Coming to America: IPOs from emerging market issuers

We compare the issue costs of 299 companies from emerging and developed market countries making initial public offerings (IPOs) in the United States between 1991 and 2001. Our results indicate that IPOs from emerging markets experience the same costs on average as IPOs from developed market countries. Although there is a large gap between the country risk ratings of the emerging and developed market countries, IPO issuers from emerging markets appear to bridge that gap by being large issuers in their respective home countries, listing more frequently on the NYSE, and having a greater proportion of activity in manufacture and infrastructure segments, and a lower proportion in high-tech segments. These issues occur following periods of strong U.S. and home market equity performance which helps to alleviate country risk. In comparison to their developed market peers, emerging market issuers are a select group of higher-quality firms.