What is American depositary receipt (ADR)?

An American Depositary Receipt (ADR) is an exchangeable certificate issued by an U.S. depositary bank, which represents a certain amount of shares in the stock of a foreign company (usually 1 share). The ADR is traded with US stock exchanges just like any other stock in the country. ADRs enable American investors to purchase shares of foreign companies which normally would not be available to them. Foreign companies also profit as ADRs let them attracted American financiers and investors without having undergo the trouble and cost to list on US stock exchanges.