Early wealth effects of Asia Pacific and European NASDAQ-listed ADRs: a comparison of 1990s and 2000s issues

Abstract

This study provides the one-month excess performance analysis of the 75 Asia Pacific and 77 European equities listed in the NASDAQ as American Depository Receipts (ADRs) from 1990 through 2009. The sample is broken down not only by region of issue, but also by timing of the issue (listed in the 1990s versus 2000s). ADRs from the Asia Pacific region outperformed the NASDAQ on average by 7.2% for the 1990s issues while those listed in the 2000s decade underperformed by 4.3% in the first month of trading. However, the monthly excess returns of European ADRs exceeded the NASDAQ by 6.2% and 6.1%, respectively, for each decade. Results suggest investing in newly listed ADRs from these regions may provide investors with early returns that exceed the market index.

Keywords:

• International investing
• American Depository Receipts
• portfolio diversification
• early wealth effects
• NASDAQ

JEL CLASSIFICATION:

• G11
• G12
• G14
• G15

ORCID

Mark Schaub http://orcid.org/0000-0002-6911-9347