Short-Term and Long-Term Performance of Ipos and Seos Traded as American Depository Receipts : Does Timing Matter?

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 1 January 1987 and 30 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 1 June 1998. The results suggest that, on average, ADR IPOs and SEOs issued prior to 1 June 1998, underperform the S&P500 in both short-term and long-term holding periods. Conversely, ADR IPOs and SEOs issued after 1 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