A) A company’s ADR is quoting at a discount of 20% to its domestic share price

Accounting Nov 20, 2020

A) A company’s ADR is quoting at a discount of 20% to its domestic share price. In order to rationalize the market, the company proposes a buyback of ADRs. The company’s CFO says that it would increase the residual debt equity ratio of the company beyond 2:1. The company’s investment banker maintains that this regulation does not apply to buyback of ADRs. Who is right?

(a) Investment Banker (b) CFO