The purpose of this paper is to examine how Korean firm American Depository Receipts (ADRs) performed vs a US index and an Asia Pacific regional index. ADRs have been known to…
Abstract
Purpose
The purpose of this paper is to examine how Korean firm American Depository Receipts (ADRs) performed vs a US index and an Asia Pacific regional index. ADRs have been known to help cause-emerging economies become more developed and foreign exchange markets become more stable.
Design/methodology/approach
The study utilizes standard ADR/IPO excess return methodology and presents returns on a month-by-month and cumulative basis for a three-year holding period beginning with the day of listing. Excess holding period returns are also provided.
Findings
The Korean firm ADRs trading on the NASDAQ underperformed both the US index and the regional Asia Pacific index for the first three years of trading. However, the Korean ADRs listed on the NYSE outperformed both the US index and the Asia Pacific index for the three-year holding period.
Originality/value
This paper shows how including equities of Korean firms traded in US markets in a stock portfolio helps to provide international diversification benefits. Solid performance vs market indexes may make subsequent and new issues from Korea more attractive in US equity markets.
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Mark Schaub and Garland Simmons
American depository receipts (ADRs) listed on the New York Stock Exchange during the 1990s and 2000s are compared to determine how well they performed versus the US index and…
Abstract
American depository receipts (ADRs) listed on the New York Stock Exchange during the 1990s and 2000s are compared to determine how well they performed versus the US index and respective regional indexes utilizing three-year holding period excess returns. Results suggest that ADRs listed in the 2000s perform better than those in the 1990s. Also, seasoned equity offerings performed better than initial public offerings. Regression analysis indicated the best predictors of ADR performance are the returns of the respective regional index where the ADR-listing firm is headquartered, the date of issue (2000s vs 1990s), and whether the ADR was from an emerging economy.
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Mark Schaub, Margaret Kilcoyne and R. Stephen Elliott
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…
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.
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The purpose of this study is to determine whether Latin American ADRs provided US investors with international diversification benefits as determined by comparing excess returns…
Abstract
Purpose
The purpose of this study is to determine whether Latin American ADRs provided US investors with international diversification benefits as determined by comparing excess returns from issues listed in the 1990s to those listed in the 2000s. A further sample breakdown compares IPO returns to SEO returns.
Design/methodology/approach
Standard ADR return methodology used in many previous studies is utilized to compute and test excess returns. This methodology is the same as the standard methodology used in IPO studies.
Findings
The total Latin American ADR sample returned roughly the same as the S & P 500 index for the three year holding period; however, those issued before 2000 underperformed the index by nearly 19 percent while those listed after January 1, 2000 outperformed the index by nearly 58 percent. The excess returns of IPOs were nearly 50 percent less than SEOs when compared to the index. Also, both IPOs and SEOs listed after the new millennium began drastically outperformed those listed in the 1990s (when compared to the S & P 500 index).
Originality/value
This study differs from previous studies by emphasizing differences in return behaviour for Latin American ADRs listed during a decade of steady sustained growth (the 1990s) versus those listed in the 2000s when the US stock market encountered times of extreme return volatility. The implications of the return differences help determine whether these ADRs provided investors with true diversification benefits. Also, the dataset includes fresh results for ADRs listed during and trading through the mortgage crisis of 2008.
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Mark Schaub and Bruce L. McManis
We utilize cross-sectional regression analysis to identify key variables affecting the initial three-year holding period returns of foreign equities traded as American Depository…
Abstract
We utilize cross-sectional regression analysis to identify key variables affecting the initial three-year holding period returns of foreign equities traded as American Depository Receipts (ADRs) on the New York Stock Exchange (NYSE). Our results suggest that U.S. market index movements and foreign exchange rates are the main determinants of the initial three-year holding period returns for 285 ADRs listed from January 1990 through December 2002. The determinants vary once the sample is broken into subsets comparing ADRs issued before 1998 to those issued afterwards, ADRs issued as IPOs versus SEOs, and Asia Pacific ADRs versus European and Latin American ADRs. We also find that U.S. interest rate movements and type of ADR issue (IPO versus SEO) provide little explanatory power for ADR returns overall.
The purpose of this paper is to determine what types of short-term wealth effects accrued to European and Latin American American Depository Receipt (ADR) investors and whether…
Abstract
Purpose
The purpose of this paper is to determine what types of short-term wealth effects accrued to European and Latin American American Depository Receipt (ADR) investors and whether these were affected by the type of issue (initial public offerings (IPO) vs seasoned equity offerings (SEO)) or the date of issue (1990s vs 2000s).
Design/methodology/approach
Standard ADR and IPO excess return methodology is utilized to compute and test excess returns against a US investment benchmark. This methodology is used in many ADR and IPO studies.
Findings
European SEOs listed in the 2000s did better than those listed in the 1990s. The results for European IPOs were the opposite. Latin American SEOs did better relative to the US market index for issues listed in the 1990s as compared to those listed in the 2000s. Once again the results for Latin American IPOs were the opposite.
Originality/value
This study differs from previous studies by emphasizing differences in short-term return behaviour for Latin American and European ADRs listed during a decade of US market stability (the 1990s) vs those listed in the 2000s when the US stock market encountered times of extreme return volatility. These timing differences affect not only the returns of all the ADRs but also show how ADR IPOs and SEOs tend to have opposite return behaviour based on timing. These return differences are important because the major benefits of portfolio diversification are achieved when asset returns are less correlated with each other.
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This study aims to examine the industry reaction as determined by stock returns when firms in the electric services industry announced receipt of Going concern audit opinions from…
Abstract
Purpose
This study aims to examine the industry reaction as determined by stock returns when firms in the electric services industry announced receipt of Going concern audit opinions from 1984 through 1991.
Design/methodology/approach
The study utilizes standard event study methodology to test for significant excess performance.
Findings
From 1984 to 1991, going concern opinion (GCO) announcements produce a contagion response in the industry on the announcement date more than half the time. Also, over the event window of the announcement date plus the five days following, six of the seven announcements were accompanied by significant negative industry reaction. Regression analysis suggests non‐announcing a firm's leverage and earnings correlation with the announcing firm significantly impact abnormal returns, as does the exchange on which the announcer's equity is traded, the size of the announcing firm and whether nuclear plant problems were mentioned in the announcement.
Research limitations/implications
The findings suggest that audit opinions provide new information for investors in the electric services industry. Also, GCO announcements in this industry normally result in contagion among rival firms.
Originality/value
This paper provides insights into investor reactions to news contained in Going concern audit opinions in the electric services industry.
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The finance literature extensively documents the abnormal positive returns of unseasoned initial public offerings (IPOs) in the early trading. Neuberger and LaChapelle (1983)…
Abstract
The finance literature extensively documents the abnormal positive returns of unseasoned initial public offerings (IPOs) in the early trading. Neuberger and LaChapelle (1983), McDonald and Fisher (1972), Neuberger and Hammond (1974), Reilly (1977), Logue (1973), Ibbotson (1975), Ibbotson and Jaffe (1975), Ritter (1984), Miller and Reilly (1987), and Ibbotson, Sindelar and Ritter (1988) are but a few studies providing convincing evidence of initial price volatility in IPOs which, after some period of time, tends to level off. Some IPO studies, particularly Neuberger and LaChapelle (1983), Logue (1973), and Friend (1967), intentionally ignore institutional IPOs. Logue (1973) states that banking issues create a downward pricing bias because the market has already accurately priced the assets of financial institutions. Alli, Yau and Yung (1994) provided evidence that banking IPOs enjoyed significantly less positive abnormal returns in the early trading than a control sample of industrial firms. This study examines the early stock price movements of the 32 non‐US banking equities issued on the New York Stock Exchange (NYSE) from January 1986 through May 2001 and finds that virtually no underpricing exists in the early trading for those issues – a vast deviation from the results of most IPO and ADR event studies, but a strong indication that banking IPOs do create a downward pricing bias when considered in IPO studies with securities from different industries. All new foreign equity issues in this study are traded as American Depository Receipts (ADRs) except the Canadian stocks.
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This study examines the initial two‐week excess performance relative to the S&P 500 Index of American Depository Receipts (ADRs) listed on the New York Stock Exchange from January…
Abstract
Purpose
This study examines the initial two‐week excess performance relative to the S&P 500 Index of American Depository Receipts (ADRs) listed on the New York Stock Exchange from January 1987 to September 2001 to determine whether short‐term wealth effects exist.
Design/methodology/approach
Standard intial public offering methodology is used to test for significant excess performance.
Findings
Results for the entire sample of 281 ADRs suggest the initial excess performance was not significant. However, after segmenting the sample, emerging market ADRs significantly outperformed the S&P 500 by over three per cent while developed market ADRs underperformed by 0.92 per cent. Also, Latin American ADRs outperformed the market index by nearly five per cent during the first two weeks after issue while European ADRs underperformed the market by nearly one per cent. Asia Pacific ADRs underperformed the S&P 500, but not significantly in the early trading.
Research limitations/implications
The findings suggest emerging market ADRs, particularly those from the Latin American region, perform well in the early trading while developed market ADRs do not. Future research may identify variables that affect or explain ADR excess returns.
Originality/value
The paper provides insights into the types of ADRs that accumulate wealth in the short term investment horizon.
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Shallu Batra, Mohit Saini, Mahender Yadav and Vaibhav Aggarwal
This study aims to conduct a comprehensive bibliometric analysis to determine the intellectual structure of cross-listing studies and suggests a road map for future research in…
Abstract
Purpose
This study aims to conduct a comprehensive bibliometric analysis to determine the intellectual structure of cross-listing studies and suggests a road map for future research in this field.
Design/methodology/approach
A step-by-step procedure was carried out. With the help of a defined search string, 580 articles from reputed journals have been retrieved from the Scopus database. Bibliographic coupling and keyword analysis were executed to understand the current research scenario and future research directions in this research field. In addition, R Studio combined with VOSviewer was employed to analyse and visualise the data.
Findings
The results provide a deeper insight into publication trends, most prolific countries, institutions and journals in the area of cross-listing. The highest collaboration was observed between the authors in the USA and Canada. Moreover, the results contradict Bradford's and Lotka's laws. A thorough review of the literature identifies five clusters in this domain. Finally, keyword analysis offers a future road map in cross-listing research.
Originality/value
Researchers have shown greater interest in cross-listing topics over the past decades. Even though the research volume on this subject is increasing, the current retrospective is still insufficient. To the best of the authors' knowledge, this study is the first to provide valuable insights to practitioners, academicians, and prospective researchers about the intellectual structure of cross-listing and also offers future avenues in this research field through bibliometric analysis.