In international capital markets, American depositary receipts are often overlooked. Set up decades ago, these securities have long offered international companies a way of reaching US investors. After initially gaining in popularity, some ADR programmes have waned in recent years as large US fund managers concluded they could more efficiently buy shares on local exchanges around the world. At the same time, some European companies have cancelled their US listings in order to escape complying with Sarbanes-Oxley legislation.
The waning popularity of ADR programmes in Europe has been partly offset by companies in emerging markets with less well-developed stock markets using ADRs to reach US investors. The concept of depositary receipts has also been picked up by other exchanges, who have set up similar programmes in an effort to attract listings.
