Hazardous to your wealth? The early and long-term performance of Mexican ADRs on the New York Stock Exchange

Abstract

This paper examines the early and long-term performance of Mexican American depository receipts (ADRs) issued on the New York Stock Exchange from 1991 to mid-1996 (shortly before and after NAFTA took effect in early 1994). ADR return behaviour was measured using initial public offerings event study methodology and compared with that of other ADR performance studies. Overall, Mexican ADRs performed well in the early trading, but substantially underperformed the market benchmark in the long run.