Long‐Term Performance of Canadian and Mexican Equities Traded on the New York Stock Exchange: Is There a NAFTA Effect?

Abstract

A sample of twenty‐six Mexican and fifty‐nine Canadian equities listed on the New York Stock Exchange are examined to determine whether these foreign equities outperform the S&P 500 as a result of the North American Free Trade Agreement of 1994. Data are tested for significant differences in performance before and after the introduction of NAFTA during the period 1980‐2000. Findings show no significant post‐NAFTAdifference in the three‐year performance of the Mexican equities. However, the post‐NAFTA sample of Canadian equities significantly outperformed the S&P 500 by 28.8 percent, perhaps suggesting a NAFTA‐related wealth effect for the Canadian firms.