Definitions for "American Depository Receipt"
Documentation evidencing ownership of shares of foreign corporations that have been placed in custody at a bank and reissued in a form that can trade in domestic securities markets. Usually called "ADRs." ADRs are negotiable securities and certificates are issued that are similar to stock and bond certificates.
Trust receipts equal to a specific number of shares of corporate stock issued in a foreign country. ADRs are sold and traded in the United States.
Certificate issued by an American bank which represents a foreign stock share held on deposit. The certificate, transfer, and settlement practices for ADRs are identical to those of U.S. securities. U.S. investors often prefer ADRs to direct purchase of foreign shares because of the ready availability of price information, lower transaction costs, and timely dividend distribution. For most practical purposes, trading an ADR is equivalent to trading the foreign stock.