When a company based abroad wants to sell its stock to U.S. investors, it can offer its shares on the U.S. market by going through a U.S. bank, which is known as the depositary. In this arrangement, the depositary bank holds the issuing company's shares, known as American depositary shares (ADSs). Then the bank offers investors the chance to buy a certificate known as an American depositary receipt (ADR) that represents ownership of a bundle of the depositary shares.
Hundreds of ADSs trade on major U.S. stock markets, and you can look up quotes and information using their ticker symbols, just as you can with ordinary U.S. stocks. Among names you may recognize are Toyota, GlaxoSmithKline, and Sony.
To be listed, companies that issue ADSs must meet several corporate accountability requirements. They must provide English-language versions of their annual reports, use accepted U.S. accounting practices, and extend certain shareholder rights. And they must have a large enough market capitalization and number of shares in the marketplace to meet listing requirements imposed by the exchange or market where they are listed.
Dividends are paid in U.S. dollars by the depositary bank, which subtracts its service fees and expenses before crediting your account.
Over the counter
Most ADRs aren't listed on an exchange, often because they are too small to meet listing requirements. Instead, they're traded over the counter (OTC).
Some of the issuing companies register with the SEC and submit the required filings. Others do not, which means you may not be able to get the same level of information about the company as you can with a registered ADR. The OTC markets are also generally less liquid than the major exchanges, which can make OTC ADRs more difficult to sell at the price you want.
Jeffrey Rosensweig, Goizueta Business School, Emory University
Going global
When a company makes depositary arrangements to sell its stock in two or more countries, the shares are called global depositary shares and they are sold as global depositary receipts (GDRs).
In all other ways, they're indistinguishable from ADRs.
When a company based abroad wants to sell its stock to U.S. investors, it can offer its shares on the U.S. market by going through a U.S. bank, which is known as the depositary. In this arrangement, the depositary bank holds the issuing company's shares, known as American depositary shares (ADSs). Then the bank offers investors the chance to buy a certificate known as an 
Jeffrey Rosensweig, Goizueta Business School, Emory University 