Buy-and-Hold Returns of American Depository Receipts (ADRs) of Pharmaceutical Companies: Are these Returns Comparable to the Returns of US Pharmaceuticals and S&P 500 Index?

Group Affiliation: 
- Private group -
IMI Kolkata, India
Subhashis Nandy, Fiona Sussan
Presentation Date: 
Friday, December 29, 2017
Event or Conference: 
Finance and Economics Conference 2017 (FINECON 2017)
Presentation Type: 
Paper Presentation
Boyer's Domain: 
Presentation Location: 
2/4 C Judges Court Road,
Kolkata 700 027
Published literature on the performance of American Depository Receipts (ADRs) mainly measured cumulative excess returns in 21-day or 3-year windows from a market timing perspective. These studies did not investigate the performances of ADRs from a buy-and-hold perspective for an extended time period, or their performances within a specific industry. The current research work fills the gap in knowledge by introducing the concept of buy-and-hold returns of ADRs for 17 years (2000 to 2016) within the healthcare industry. For this research pharmaceutical ADRs were selected, and the risk-adjusted buy-and-hold returns of these ADRs were compared with those of U.S. pharmaceuticals and S&P 500 Index. The results of non-parametric tests of risk-adjusted buy-and-hold returns have suggested that the risk-adjusted buy-and-hold returns of ADRs, U.S pharmaceuticals, and S&P 500 are not the same. The findings of this research are different from those of prior research, and have significant managerial implications.