3.2.1. Dependent Variable

Obtaining the data of R&D investments from the Compustat database, we then estimated the difference in R&D in year 0. In Equation (2), on the basis of [2,7,14,15,19], we defined this variable, and it was equal to the R&D expenditure in year 0 minus the R&D expenditure in year −1 and then divided by firm assets in year −1. Thus, the measurement of the dependent variable was expressed as follows:

$$
\Delta R \& D\_0 = \left( R \& D\_0 - R \& D\_{-1} \right) / A \text{sset}\_{-1} \tag{2}
$$

Moreover, we calculated the industrial modified difference in R&D expenditure. We computed these R&D investments of sample firms and those of industrial rival firms. The industrial modified difference in R&D expenditure was equal to the change in R&D of a sample firm in year 0 minus the mean of the changes in R&D of the others with the same four-digit SIC code in year 0.

#### 3.2.2. Independent Variable

While the issue of ADR increased a firm's equity share, we questioned whether crosslisting firms would utilize the reputation brought about by the successful ADR issue to increase their financial leverage ratio (i.e., the amount of debt financing) to an even higher proportion than before undertaking the ADR issue. In Equation (3), according to [8–11,33], we calculated the difference of leverage as follows:

Δ *Leverage*0=[(*Long*-*term Debt* 0+*Short*-*term Debt*0) − (*Long*-*term Debt* −1+*Short*-*term Debt*−<sup>1</sup>)]/(*Asset* −<sup>1</sup>- (3)

> Following [8–11,33], we measured the difference of leverage by the change between the sum of long-term and short-term debts in year 0 and the sum of long-term and shortterm debts in year −1. We used this variable, Δ *Leverage*0, as the measurement of increase in leverage ratio in this study.

#### *3.3. Descriptive Statistics*

Table 1 presents the distribution of our sample firms according to the year when they launch the ADR cross-listing, as well as the amount of debt financing as defined by Equation (1). First, we find a slowly growing trend in the cross-listings. Further, we discover that the amount of debt financing increases stably measured by either mean or median of debt financing. The mean of debt financing in all samples is 15.31%, and its median is 15.69%. As the mean was almost equal to the median, the result shows that the distribution of sample is nearly symmetrical (i.e., without outliers). Finally, the significant positive mean and median values of debt financing across the event years sugges<sup>t</sup> that most sample firms use significant debt financing along with the launch of cross-listings.


**Table 1.** Sample distribution and debt financing by year.

## **4. Empirical Results**
