Submitted by Subhashis Nandy on
Group Affiliation:
- Private group -
University of Phoenix
Presentation Date:
Thursday, August 16, 2018
Event or Conference:
KWBRS 2018
Presentation Type:
Symposia
Boyer's Domain:
Presentation Location:
1625 W. Fountainhead Pkwy
Tempe, AZ
United StatesAbstract:
Previous research has compared the returns of American Depository Receipts (ADRs)
and stock indices (e.g., NASDAQ, S&P500), but did not compare the compounded yearto-year
buy-and-hold returns of ADRs at the individual stock level within a specific
industry. For portfolio diversification purposes, it is possible that investors buy-and-hold
certain ADRs for a period longer than three years. As such, it is important for both
institutional and individual investors to evaluate the returns of ADRs in more details, so
they can make informed investment decisions. Filling this gap of knowledge, this
research selected eleven pharmaceutical ADRs from eight countries that are listed in
NYSE from 2000 to 2016 and compared them against five major U.S. pharmaceutical
companies during the same time period. The focus on pharmaceutical industry is because
U.S. is the largest single pharmaceutical market in the world with a 45% market share.
Our empirical results found most ADRs over-perform when compared to U.S.
pharmaceuticals during this time period. The non-parametric test results confirmed that
the returns of ADRs and U.S. pharmaceuticals are not the same, and ADRs no the whole
had higher returns than U.S. pharmaceuticals and S&P 500. The findings have important
managerial implications.