Terminologies like ADR and GDR are concepts used in terms of economics to understand the capital market. For students, this concept forms a part of their syllabus in class 11th Business studies in the commerce stream. However, students often miss out on understanding these terms and find the subject to be difficult. Whereas, in reality, these are very simple concepts if taught and learned properly.
The students need not worry anymore as a team of experts at has analyzed the challenges faced by the students and has scientifically prepared notes on various similar terms making it simpler for the students to understand.
Download the free PDF notes from the study materials available on the Website of or students can also access the study materials from ‘s mobile app.
In this Article, Students will be Able to Learn the Following Concepts Related to ADR and GDR-
-
What is an ADR?
-
What is a GDR?
-
What is the significant difference between ADR and GDR?
-
Key takeaways from the chapter
-
Frequently asked questions
What is an ADR?
An American depositary receipt abbreviated as ADR is a type of negotiable certificate that is issued by a U.S. depositary bank that represents a specified number of shares, generally a single share- which is of a foreign company’s stock. The ADR trades on the U.S. stock markets as any domestic shares would trade.
What is a GDR?
A global depository receipt which is abbreviated as GDR is quite similar to the American Depository Receipt. This is a type of bank certificate which represents the share in a foreign company. This is a foreign bank that holds the shares internationally. The shares are traded as domestic shares among them, but, globally, various bank branches offer the shares for sale.
What is the Difference Between ADR and GDR:
|
Basis for Comparison |
ADR |
GDR |
|
Full-Form |
American Depository Receipt |
Global Depository Receipt |
|
Meaning |
This is a negotiable instrument which is issued by the US Bank, which represents the Non- US Company stock that is being traded in the US stock exchange. |
GDR is a negotiable instrument which is issued by the international depository bank that represents the foreign company’s stock trading world-wide. |
|
Relevance |
Foreign companies are able to trade in the US Stock Market. |
In this case, the foreign companies can trade in any country’s stock market other than that of the US. |
|
Issued where |
In the United States domestic capital market. |
European Capital market. |
|
Listed in |
In the American Stock Exchange like the NYSE or the NASDAQ. |
In the Non-US Stock Exchange like the London Stock Exchange or the Luxembourg Stock exchange. |
|
Negotiation is done |
Only in America |
All over the world |
|
Disclosure Required |
Onerous |
Less Onerous |
|
Market |
Retail Investor Market |
Institutional Market |
Key Takeaways from the Chapter –
-
ADR is issued by a US bank making it easy for the US investors to invest in foreign companies.
-
GDR is issued by a depository bank located outside the domestic boundaries of the company
-
The difference between ADR and GDR is on the basis of –
-
Meaning
-
Currency
-
Purpose
-
Issues by
-
Stock exchanges they are listed on
-
Market