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Does market timing or issue type affect the long-run performance of UK American Depository Receipts listed on the New York Stock Exchange?

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  • Mark Schaub

Abstract

This study examines the long-term return performance relative to the S&P 500 Index of American Depository Receipts issued by UK firms and listed on the New York Stock Exchange. Subsamples are used to capture effects of ADR issue type (Initial Public Offering (IPO) versus Seasoned Equity Offering (SEO)) and how market timing (bull versus bear markets) affects returns. Three-year return performance suggests UK ADRs perform similar to the S&P 500 Index, underperforming by less than 5 per cent. The IPO sample underperformed the market index by nearly 18 per cent while SEOs perform very similar to the market. Breaking the sample down to capture market-timing effects, the UK ADRs trading through the bull market underperformed by nearly 13 per cent while those listed and trading through the bear market barely outperformed the S&P 500 (by 2.6 per cent).

Suggested Citation

  • Mark Schaub, 2011. "Does market timing or issue type affect the long-run performance of UK American Depository Receipts listed on the New York Stock Exchange?," Journal of Asset Management, Palgrave Macmillan, vol. 12(3), pages 157-162, August.
    • Handle: RePEc:pal:assmgt:v:12:y:2011:i:3:d:10.1057_jam.2011.8
    DOI: 10.1057/jam.2011.8
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    References listed on IDEAS

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    1. Callaghan, Joseph H. & Kleiman, Robert T. & Sahu, Anandi P., 1999. "The market-adjusted investment performance of ADR IPOs and SEOs," Global Finance Journal, Elsevier, vol. 10(2), pages 123-145.
    2. Schaub, Mark & Highfield, Michael J., 2006. "Market timing wealth effects of American Depository Receipts: The cases of emerging and developed market issues," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 16(3), pages 270-282, July.
    3. Christine X. Jiang, 1998. "Diversification with American Depository Receipts: The Dynamics and the Pricing Factors," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 25(5&6), pages 683-699.
    4. Christine X. Jiang, 1998. "Diversification with American Depository Receipts: The Dynamics and the Pricing Factors," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 25(5‐6), pages 683-699, June.
    5. Mark Schaub, 2010. "A note on the performance of Chinese American Depository Receipts," Applied Economics Letters, Taylor & Francis Journals, vol. 17(5), pages 431-435.
    6. Mark Schaub & Michael J. Highfield, 2004. "Short-term and long-term performance of IPOs and SEOs traded as American depository receipts: Does timing matter?," Journal of Asset Management, Palgrave Macmillan, vol. 5(4), pages 263-271, December.
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    Cited by:

    1. Arjan Premti, 2013. "Earnings Management Prior to Initial Public Offerings and Its Effect on Firm Performance: International Evidence," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 4(3), pages 10-24, July.

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