That is changing rapidly, however, as stock markets in other parts of the world flourish. Total caps of ADRs and foreign stocks trading on US markets are drawing closer to the size of domestic market caps trading there, as the pie chart shows.
International Accounting Board Adds Transparency to Foreign Stocks
Advancement of uniform international accounting rules, instigated by the creation of the London-based International Accounting Standards Board (IASB) in April 2001, has helped trigger this proliferation of international equities. Like the Financial Accounting Standards Board (FASB) of the US, the IASB is privately-funded and independent.
That development, which has added greater transparency to global financial reporting, has raised investors’ comfort level with investing in remote foreign equities.