ADR has two common meanings depending on context:
- American Depositary Receipt (ADR):
- It is a negotiable certificate issued by a U.S. depositary bank representing shares in a foreign company.
- ADRs allow U.S. investors to buy stock in foreign companies easily on American stock exchanges in U.S. dollars.
- The underlying shares are held by a U.S. financial institution.
- ADRs can be listed on exchanges like the NYSE or Nasdaq, or traded over-the-counter.
- They come in different levels depending on how much the foreign company participates in U.S. markets.
- ADRs benefit both U.S. investors by simplifying foreign investing and foreign companies by providing access to U.S. capital markets.
- Alternative Dispute Resolution (ADR):
- This is a broad term referring to dispute resolution methods other than litigation in courts.
- It includes processes like mediation, negotiation, and arbitration.
- ADR is typically faster, less formal, and more cost-effective than traditional lawsuits.
- It preserves privacy and business relationships and allows parties to reach mutually agreeable settlements.
- Widely used to settle civil disputes outside the judicial system.
Which ADR meaning are you interested in? The financial instrument related to foreign stocks or the dispute resolution process?
