Wealth effects of American depository receipts listed on the New York Stock Exchange: The case of telecom firms

Abstract

This study investigates the short-term and long-term performance of NYSE-listed American depository receipts (ADRs) from the telecom industry. Early performance results suggest the entire sample of 63 ADRs underperforms the S&P500 on the first day of trading but outperforms the market in the first month. In the long run, seasoned equity offerings (SEOs) outperform the S&P500 index by nearly 32 per cent by the end of the third year of trading, whereas initial public offerings (IPOs) underperform by nearly 9 per cent in the long run. Finally, these telecom ADR holding period returns are affected by the date of issue, the region of issue, the type of issue and the return of the market index as determined by regression results.