american depository receipt: meaning, definition, pronunciation and examples
C2Formal, Technical, Business
Quick answer
What does “american depository receipt” mean?
A negotiable financial certificate representing a specific number of shares in a non-U.
Audio
Pronunciation
Definition
Meaning and Definition
A negotiable financial certificate representing a specific number of shares in a non-U.S. company, traded on a U.S. stock exchange.
A security created by a U.S. depository bank that holds a corresponding number of foreign shares, allowing international companies to access U.S. capital markets without needing to meet the strict listing requirements of an ordinary U.S. stock. ADRs simplify trading, currency conversion, and dividend payments for U.S. investors.
Dialectal Variation
British vs American Usage
Differences
The term is universal in global finance. In the UK/Europe, the structurally equivalent instrument is called a 'Global Depository Receipt' (GDR), which may be traded on multiple exchanges. The term 'ADR' is still used when specifically referring to the U.S.-traded instrument.
Connotations
Identical financial and legal connotations. Implies accessibility to U.S. markets, liquidity, and compliance with U.S. Securities and Exchange Commission (SEC) regulations.
Frequency
High frequency in U.S. and global financial/business contexts. Lower frequency in general British English, but high in UK financial circles.
Grammar
How to Use “american depository receipt” in a Sentence
[Company] issued an American depository receipt.Investors can trade [Company]'s ADRs on the NYSE.The ADR represents [number] of underlying shares.Vocabulary
Collocations
Examples
Examples of “american depository receipt” in a Sentence
verb
British English
- The firm decided to ADR-ise its listing to attract transatlantic investors.
American English
- The company is exploring whether to ADR its stock for the U.S. market.
adverb
British English
- [Not applicable]
American English
- [Not applicable]
adjective
British English
- The ADR market experienced volatility.
American English
- They reviewed the depository-receipt program's fees.
Usage
Meaning in Context
Business
Primary context. Used in equity research, trading, investment banking, and corporate finance discussions about foreign companies accessing U.S. investors.
Academic
Used in finance, economics, and international business textbooks and journals.
Everyday
Extremely rare. Only used by individual investors discussing specific international stock holdings.
Technical
Core term in securities law, exchange regulations, and global custody banking.
Vocabulary
Synonyms of “american depository receipt”
Strong
Neutral
Weak
Vocabulary
Antonyms of “american depository receipt”
Watch out
Common Mistakes When Using “american depository receipt”
- Pronouncing 'depository' as /diːˈpɒzɪtri/ (incorrect stress). Correct is /dɪˈpɒzɪtəri/.
- Using 'ADR' as a plural without an 's' (e.g., 'I own five ADR' instead of 'five ADRs').
- Confusing it with an 'American Depository Share' (ADS), which is the actual share underlying the ADR certificate.
FAQ
Frequently Asked Questions
Not exactly. You own a claim on the underlying foreign shares held by a custodian bank, not the shares themselves. This affects voting rights and tax treatment, but economically it is very similar.
Level I ADRs trade over-the-counter with minimal SEC disclosure. Level II/III ADRs list on major exchanges (NYSE, NASDAQ) and require full SEC registration and reporting, similar to U.S. companies.
Yes, the depository bank converts foreign currency dividends into U.S. dollars (minus fees) and distributes them to ADR holders.
A sponsored ADR is established with the agreement and participation of the foreign company, which usually pays fees. An unsponsored ADR is created by a depository bank without the company's direct involvement, often leading to multiple ADR programmes for the same stock.
A negotiable financial certificate representing a specific number of shares in a non-U.
American depository receipt is usually formal, technical, business in register.
American depository receipt: in British English it is pronounced /əˌmer.ɪ.kən dɪˈpɒz.ɪ.tᵊr.i rɪˈsiːt/, and in American English it is pronounced /əˌmer.ə.kən dɪˈpɑː.zə.tɔːr.i rɪˈsiːt/. Tap the audio buttons above to hear it.
Phrases
Idioms & Phrases
- “[Not applicable for this technical term]”
Learning
Memory Aids
Mnemonic
Think: American (U.S.) + Depository (where something is held) + Receipt (a certificate). It's like a 'receipt' you get from a U.S. bank holding foreign shares for you.
Conceptual Metaphor
A PASSPORT for foreign shares, allowing them to travel and be traded in the U.S. market.
Practice
Quiz
What is the primary purpose of an American Depository Receipt (ADR)?