In addition, the legal structure of Euroequities may work to the advantage of issuers because of the following two constraints to financial arbitrage in secondary markets between its bearer and registered shares: (i) targeted registered shares can only be created under special SEC procedures; and (ii) a Euroequity share reverts to being a registered share, once and for all, if repatriated to the U.S.
As would be expected, larger firms favor Euroequities, and the average Euroequity issue is larger than the average domestic-equity issue, by a factor of more than three ($204.38 million compared to $67.38 million).
There appear to be significant differences in the holdings of Euroequities and domestic equities among different investor groups.
However, as the bottom portion of the exhibit shows, abnormal returns in the pre-announcement period are statistically significant at conventional levels of confidence only for Euroequities. In the announcement period, abnormal returns average -2.138% for Euroequities and -2.364% for domestic equities; both figures are significantly different from zero at conventional levels.