Definition
American Depositary Receipt (ADR)
An ADR is a US-listed certificate representing shares of a foreign company, letting Americans trade overseas firms in dollars on US exchanges.
Indian companies like Infosys and Wipro list ADRs on US exchanges, so American investors can buy them in dollars without dealing with Indian markets. Each ADR represents a set number of underlying shares held by a depositary bank.
ADRs let Indian firms access US capital and raise their global profile. Their price tracks the home-market share adjusted for the rupee-dollar rate, and a premium or discount versus the local stock reflects demand and conversion frictions.
Related terms
- Indian Depository Receipt (IDR)An IDR is the Indian equivalent of an ADR or GDR: a rupee-denominated instrument that lets Indian investors hold shares of a foreign company on Indian exchanges.
- Dual ListingDual listing is when a company's shares are listed and traded on two or more stock exchanges, often in different countries, to widen its investor base.
- Foreign ListingA foreign listing is when a company lists its shares on a stock exchange outside its home country to access overseas capital, prestige and a broader investor base.
- Global Depositary Receipt (GDR)A GDR is a bank-issued certificate representing shares of a company, traded on international exchanges outside the US, that lets firms raise foreign capital across multiple markets.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.