What is the Full form of ADR?
The ADR full form is an American depositary receipt. ADR is a negotiable paper issued by a U.S. depositary bank that frequently represents a specified number of shares of a foreign company’s stock. The ADR trades on US stock exchanges similarly to any domestic stock.
ADRs enable U.S. investors to purchase shares in overseas companies that otherwise would not be eligible. ADRs allow international companies to attract American customers and capital without the difficulties and expense of listing on the U.S. Stock exchange market.
Read Other Full Forms
How does an American depositary receipt work?
- ADRs are international company shares held and issued by a US bank.
- U.S. banks acquire shares of a foreign firm and sell them on U.S. stock exchanges in the form of American Depositary Receipts (ADRs) (NASDAQ, NYSE & AMEX).
- Each receipt represents a portion of the underlying equity of a foreign corporation.
ADR profits to investors
- They will increase the global scope of the investment portfolio.
- In accordance with the American Conventions, they will trade.
- For distributions, they collect remuneration in American Dollars.
- They will resolve ADRs through mediation in the United States.
- Investors have access to information pertinent to trading.
ADR profits for Foreign Corporation
- They have access to financing in the United States without the burden of SEC regulatory filings (Securities and Exchange Commission).
- Rising corporate exposure in the United States.
- They will increase the company’s shareholder base.
- They will expand the share market and increase global liquidity.
