Unfortunately, there is no foolproof way to distinguish US firms from foreign firms and ADR's.
There are three variables to consider: 1) Incorporation code; 2) ADR Ratios ; 3) Company Names
Here are some more details on these variables:
1) Incorporation code, Variable Name = FIC
Incorporation Code - Foreign indicates the country in which a company is incorporated.
Incorporation Code - State indicates a particular state or territory in the United States in which a company is incorporated. Any foreign company will contain a '99' in this field.
Foreign and state incorporation codes appear in separate fields in the industrial quarterly format. Refer to Chapter 8, Reference to the Compustat User's Guide for a complete listing on the Incorporation Codes.
2) ADR Ratio, Variable Name = ADRR
Most ADR's will have a non-zero numeric value as its ADR Ratio.
3) Company Name, Variable Name = CONM
Most ADR's will have "-ADR" at the end of their company names.
As we mentioned before, there is no foolproof way to screen for foreign companies and ADR's. These 3 variables will not provide 100% accurate screening.
- There are companies with ADR Ratios but not "-ADR" in their names. But most of these will have a foreign Incorporation Code.
- There are companies with ADR Ratios for only some of the years, and a 'missing value' for the other years.
- There are also companies with "-ADR" in their names but no ADR Ratios. But again, most will have a foreign Incorporation code.
- There are US companies that incorporate themselves in the Bahamas of Cayman Island for tax purposes. These will have foreign incorporation codes, but they are definitely US companies.
In the end, you may have to build a search criterion that 'scores' companies based on a combination of factors...
give a score of 50% if Incorporation Code is foreign
give a score of 25% if Company Name has "ADR"
give a score of 25% if ADR Ratio is greater than zero for any year
Then treat companies with scores of 50% or greater as foreign, and investigate companies with scores lower than 50% on a case by case basis