American Depository Receipts: The Long-Term U.S. Investor Experience

Abstract

We study long-run outcomes to those who invested in non-U.S. stocks through American Depository Receipts (ADRs) between August 1954 and September 2020, with particular attention to ADRs associated with Chinese firms. Overall, ADRs improved their investors’ wealth by $1.03 trillion, as compared to a Treasury-bill benchmark. More than a third of this amount was attributable to ADRs associated with Chinese firms. A value-weighted portfolio of ADRs associated with Chinese firms earned 1.64% per month since the first Chinese ADR was created in 1993, as compared to 0.89% per month for the overall U.S. stock market over the same period. These data are relevant to current policy discussions focused on Chinese firms listed in the U.S.