The initial short-term (21-day) and long-term (3-year) excess returns for foreign initial public offering (IPO) and seasoned equity offering (SEO) American depository receipts (ADRs) listed on the New York stock exchange from 1990 to 2009 are tested to determine differences in performance based on type of issue and date of issue for the decades of the 1990s and the 2000s. The overall sample outperformed the S&P 500 Index by over 5 % after the first 3 years of trading; however, SEO ADRs outperformed IPO ADRs by nearly 19 % (relative to the market index). Breaking IPO and SEO ADR returns down by decade of issue shows that those listed in the 2000s for both samples drastically outperformed those listed in the 1990s in the long term. Both samples of ADRs listed in the 2000s also significantly outperformed the S&P 500 index in the first 36 months of trading. In the short-term results, for the first 21 days of trading, the SEO ADRs significantly outperformed the market by 2.1 %, while IPO ADRs outperformed by 0.97 % (though not significant).
American depository receipts International investing International diversification Stock market timing Initial public offerings
F21 G11 G12 G14 G15
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The author acknowledges the assistance, direction, and excellent advice provided by the editor and an anonymous referee. Thanks for helping make the paper much better.
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