American depositary receipts (ADRs) from Latin-America: an opportunity for American investors

American Depositary Receipts (ADRs), based on stocks of firms registered in Latin-America, are rapidly gaining popularity among investors in the U.S. ADRs serve a dual purpose. First, they enable Latin firms to raise capital in the US without having to meet cumbersome security listing requirements. Second, they enable US investors to benefit from possible high returns in Latin-American securities without the inconvenience of having to deal with foreign currencies or the inconvenience of buying and selling in foreign stock markets. In academic literature, there has never been a thorough examination of the nature of ADRs issued by Latin-American firms. This study presents an overview of the patterns and trends of ADR utilization within the Latin-American region: by country; by industry; by security exchange; and, by “sponsorship”, the role played by the issuing company.