ADR stands for American Depository receipt. It is issued by the United States depository bank and is a negotiable certificate which represents a certain number of shares. This is often just one share of company stock in a foreign company. Currently, the ADR is traded like any domestic shares on United States stock markets.
Are There Fees Associated with ADR
The depository banks do charge “custody fees” which are sometimes called “Depository Service Fees.” These fees compensate the depository banks for their inventory of non-US shares. Also, the compliance, dividend, and recordkeeping are covered by these fees.
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- Do ADR investors herd?: Evidence from advanced and emerging markets – www.sciencedirect.com [PDF]