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Short-term and long-term performance of IPOs and SEOs traded as American depository receipts: Does timing matter?

Author

Listed:
  • Mark Schaub

    (Northwestern State University, College of Business)

  • Michael J. Highfield

    (assistant professor of finance at Louisiana Tech University)

Abstract

This paper examines the short-term and long-term returns of a sample of foreign equities traded on the New York Stock Exchange as American Depository Receipts (ADRs) issued between 1st January, 1987, and 30th September, 2000. Distinctions are made between those ADRs issued as initial public offerings (IPOs) and as seasoned equity offerings (SEOs) and those before and after 1st June, 1998. The results suggest that, on average, ADR IPOs and SEOs issued prior to 1st June, 1998, underperform the S&P500 in both short-term and long-term holding periods. Conversely, ADR IPOs and SEOs issued after 1st June, 1998, either perform equally or outperform the S&P500 in both short-term and long-term holding periods. Overall, the results suggest that non-negative and even positive significant cumulative wealth effects associated with stock market timing may exist for ADR IPOs and SEOs trading during holding periods in bear markets.

Suggested Citation

  • 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.
    • Handle: RePEc:pal:assmgt:v:5:y:2004:i:4:d:10.1057_palgrave.jam.2240144
    DOI: 10.1057/palgrave.jam.2240144
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    Citations

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    Cited by:

    1. Mark Schaub, 2012. "International equities listed on the New York stock exchange: does type of issue or date of issue matter?," Financial Markets and Portfolio Management, Springer;Swiss Society for Financial Market Research, vol. 26(4), pages 429-447, December.
    2. Li, Shi & Li, Tianze & Mittoo, Usha & Song, Xiaoping & Zheng, Steven Xiaofan, 2019. "ADR valuation and listing of foreign firms in U.S. Equity markets," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 58(C), pages 284-298.
    3. 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.
    4. Beckmann, Klaus S. & Ngo, Thanh & Wang, Daphne, 2015. "The informational content of ADR mispricing," Journal of Multinational Financial Management, Elsevier, vol. 32, pages 1-14.
    5. Mark Schaub, 2013. "Long-Run Performance of Emerging Market ADRs: Evidence From Issues Listed on the New York Stock Exchange From 1990 Through 2009," Global Journal of Emerging Market Economies, Emerging Markets Forum, vol. 5(1), pages 41-54, January.

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