Correspondence: Mark Schaub, Northwestern State University, College of Business, 201 Russell Hall, Natchitoches, Louisiana 71497, USA. Tel.: +1 318 357 5704; Fax: +1 318 357 5990; E-mail: schaubm@nsula.edu

¹is the Hibernia National Bank Endowed Associate Professor of Finance at Northwestern State University of Louisiana.

Received 11 January 2007; Revised 11 January 2007.

Abstract

In this study, I examine New York Stock Exchange-listed American Depository Receipts (ADRs) from industrial firms to determine overall short- and long-term investment performance and whether the level of issue (emerging versus developed) or timing of issue (before or during the US bear market) affects ADR performance relative to the S&P 500. Early performance results suggest a slight underperformance by the industrial portfolio; however, emerging issues significantly underperform the market index while developed issues outperform the S&P 500 during the first month of trading. After three years of trading in the US markets, industrial ADRs return roughly the same as the S&P 500; however, emerging issues underperform developed issues and ADRs listed before 1/1/98 drastically underperform the market index while those listed after 1/1/98 substantially outperform the market. These results provide evidence that level of issue and timing of issue affect portfolio returns when investing in industrial ADRs.