Initial wealth effects of the Brexit vote on UK ADRs

ABSTRACT

On 23 June 2016, the United Kingdom voted to exit the European Union. The outcome of this vote, called Brexit, impacted financial markets in the days following the vote results. This article investigates the impact of Brexit upon UK equities trading as American Depository Receipts (ADRs) on the New York Stock Exchange. On the day after the vote results were in, UK ADRs lost over 10% of their value with an additional loss of over 5% the following day. These losses were significantly greater than those of the S&P 500 and the FTSE 100 indexes.

KEYWORDS:

• International investing
• American Depository Receipts
• portfolio diversification
• early wealth effects
• event studies

JEL CLASSIFICATION:

• G11
• G12
• G14
• G15

Disclosure statement

No potential conflict of interest was reported by the author.