ADR stands for American Depository Receipt. This term is used in the context of stock markets. It is a receipt or certificate that represents shares of a foreign stock. It is issued by a U.S. bank to a person who is interested in buying shares of a foreign stock or non-US Company through U.S. stock exchange. ADR was introduced in 1927 to offer U.S. investors an easier way to buy stocks of foreign companies.
It is issued and pays dividend in U.S. dollars which allows domestic investors to own shares of a foreign company without the hassle of currency conversion. It also helps foreign companies attract American investors by trading on U.S. stock exchanges. The shares represented by an ADR are called American depositary shares (ADSs).