What is ADR?

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Do you know that some foreign companies also trade in US stock exchanges?  You may be familiar with products of some of these foreign owned companies.  Cadbury (makers of chocolates and also owners of Snapple drinks), Toyota, Sony, Nokia, Glaxo, Siemens, BP (formerly known as British Petroleum) and Royal Dutch Shell are some of the foreign companies whose products you may have seen or used.  Shares of these companies trade as ADRs in US. 

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What is ADR? ADR stands for American Depository Receipts.  These are shares of foreign companies that are trading in stock exchanges in United States.  ADRs trade in US dollars and pay dividends in US dollars.  This makes it easier for US investors as they don’t need foreign currency if they want to invest in these companies.

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Did you know that automobile company Chrysler was an American company for a very long time, from 1914 to 1998?  In 1998 it joined with Daimler Benz (they make Mercedes Benz cars) of Germany and became a foreign company.  The new company was called DaimlerChrysler.   Shares of the new company traded as ADRs in US stock exchanges from 1998 to 2007. In August of 2007, DaimlerChrysler broke up and the American part, i.e., Chrysler, became a private company.