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This is one of the first large-scale studies to examine the voluntary disclosure practices of foreign firms cross-listed in the United States. We proxy for voluntary disclosure using three attributes of firms' management earnings guidance: (1) the likelihood of issuance; (2) the frequency of earnings guidance; and (3) a guidance quality measure. After first establishing that market participants view these firms' disclosures as credible and economically important (i.e., the disclosures are negatively related to analyst forecast errors and the implied cost of equity capital), we compare cross-listed firms' disclosure practices with comparable U.S. firms and explore variations in disclosure practices among cross-listed firms. We find that cross-listed firms issue less frequent and lower quality management earnings guidance than comparable U.S. firms. We further show that the gap between U.S. and cross-listed firms widened after passage of Regulation FD, a regulation which induced greater public disclosure of firm-specific information. Focusing on the sample of cross-listing firms, we show that firms from common-law countries disclose more than firms from code-law countries. Finally, our results indicate that cross-listed firms that do not list on an organized U.S. exchange provide more frequent and higher quality disclosure than those that do list on organized exchanges.
The number of foreign companies accessing the United States (U.S.) public securities markets has increased dramatically over the last ten years. Since 1997, over 600 foreign companies have registered securities with the Securities and Exchange Commission (SEC) for the first time. As of December 31, 2004, more than 1200 companies from 57 countries were filing periodic reports with the SEC. Securities regulation for these companies has always been a matter of debate and a stream of research has examined the disclosure practices of foreign companies listed in the U.S. However, none of those studies have looked at the voluntary disclosure practices of U.S.-listed Asian companied in the U.S. There have been some studies which have examined the disclosure practices of companies in the individual Asian countries, but none of them have comprehensively investigated the disclosure practices of all U.S.-listed Asian companies. The study at hand contributes to the international accounting literature by specifically examining the voluntary disclosures provided by U.S.-listed Asian companies in the U.S. This study examined three research objectives. (1) The first research objective of this study was to test the Einhorn (2005) theory on U.S.-listed Asian companies. This theory indicates that the voluntary disclosures (measured by Botosan, 1997) of companies will be positively related to the strictness of their mandatory disclosure environment (measured by a survey of experts). (2) Secondly, the study examined the extent to which voluntary disclosures provided by U.S.-listed Asian companies in the U.S. are convergent, and determined the effect of culture on those disclosures [Warner (2003), Gray (1988) and Zarzeski (1996)]. (3) Lastly, the current research investigated the voluntary use of "international" standards instead of national standards by U.S.-listed Asian companies in preparation of their consolidated financial statements. This aspect of the study has extended the evidence in Tarca (2004). Results of this study provide perhaps the first empirical evidence on the voluntary disclosures provided by U.S.-listed Asian companies in the U.S.A total of seven hypotheses were developed and statistically tested to accomplish the research objectives. The evidence produced in this study indicates that U.S.-listed Asian companies (from countries which have a stricter mandatory disclosure regime in their home country) provided significantly fewer voluntary disclosures than the U.S.-listed Asian companies (from countries which have a less strict mandatory disclosure regime). This finding is contrary to the theory developed in Einhorn, 2005. In addition, this study has documented that over 80 percent of the U.S.-listed Asian companies are voluntarily using "international" standards in preparation of their financial statements and thus contributing towards International accounting convergence. However, their choice to use "international" standards is not affected by their proportion of foreign sales or their size. An important contribution of this study is the development of a measure for strictness of mandatory disclosure regimes of Asian countries by two alternative methods by expert rankings and by using the results of Adhikari and Tondkar (1992). The results of this study complement Cahan et al. (2005) who examine the effect of global operations and global financing on voluntary disclosures of companies from the Fortune 500 list. They report a significant association between globalized operations and voluntary disclosures of companies. However, their study does not include the strictness of mandatory disclosure regime which, according to Einhorn (2005) is a significant determinant of voluntary disclosures. The results of the current research regarding culture variables, however, are not completely consistent with Zarzeski (1996). Zarzeski shows that domestic culture is an important determinant for voluntary disclosures. However, the current research results remain inconclusive in this aspect. This study does not find strong evidence of a relation between domestic culture and the voluntary disclosures provided by U.S.-listed Asian companies in the U.S. Nonetheless, there appears to be clear consensus from this dissertation that provides evidence to reject the Einhorn (2005) theory and the results also provide support for the argument that U.S.-listed Asian companies are contributing towards International accounting convergence
We analyze the disclosure practices of companies as a function of their interaction with the U.S. markets for a group of 794 firms from 24 countries in Asia-Pacific and Europe. Our analysis uses the Transparency and Disclosure scores developed recently by Standard amp; Poor's. These scores rate the disclosure of companies from around the world using U.S. disclosure practices as an implicit benchmark. Results show a positive association between these disclosure scores and a variety of market interaction measures, including US Listing, US investment flows, export to and operations in the US. Trade with US, however, has an insignificant relationship with the disclosure scores. Our empirical analysis controls for the previously documented association between disclosure and firm size, performance, and country legal origin. Our results are broadly consistent with the hypothesis that cross-border economic interactions are associated with similarities in disclosure and governance practices.
There's never been a greater likelihood a company and its key people will become embroiled in a cross-border investigation. But emerging unscarred is a challenge. Local laws and procedures on corporate offences differ extensively - and can be contradictory. To extricate oneself with minimal cost requires a nuanced ability to blend understanding of the local law with the wider dimension and, in particular, to understand where the different countries showing an interest will differ in approach, expectations or conclusions. Against this backdrop, GIR has published the second edition of The Practitioner's Guide to Global Investigation. The book is divided into two parts with chapters written exclusively by leading names in the field. Using US and UK practice and procedure, Part I tracks the development of a serious allegation (whether originating inside or outside a company) - looking at the key risks that arise and the challenges it poses, along with the opportunities for its resolution. It offers expert insight into fact-gathering (including document preservation and collection, witness interviews); structuring the investigation (the complexities of cross-border privilege issues); and strategising effectively to resolve cross-border probes and manage corporate reputation.Part II features detailed comparable surveys of the relevant law and practice in jurisdictions that build on many of the vital issues pinpointed in Part I.
Establishing a corporate governance strategy that promotes the efficient use of organisational resources is instrumental in the economic growth of a country, as well as the successful management of firms. This book reviews existing literature and identifies board structural features as key variables of an effective corporate governance system, establishing a multi-theoretical model that links Board structural characteristics with firm performance. It then, using a comprehensive empirical study of 265 companies listed on the Karachi Stock exchange, tests this conceptual model. This research serves as a significant milestone, reflecting the socio-economic setting of emerging economies, and highlighting the need for the corporate sector in emerging markets to move away from a 'tick-box' culture. It argues that the sector needs to implement corporate governance as a tool to mitigate business risks; appoint and empower non-executive directors to achieve an effective monitoring of management; and establish their own ethical and governance principles, applicable to the Board of Directors. Based on an extensive data base, collected painstakingly over five years, this book offers new insights and conceptual framework for further research in this area. Given the breadth and width of the research, it is a useful source of future reference for students, researchers and policy makers.
De la Torre, Levy Yeyati, and Schmukler present a framework to analyze financial globalization. They argue that financial globalization needs to take into account the relation between money (particularly in its role as store of value), asset and factor price flexibility, and contractual and regulatory institutions. Countries that have the "blessed trinity" (international currency, flexible exchange rate regime, and sound contractual and regulatory environment) can integrate successfully into the world financial markets. But developing countries normally display the "unblessed trinity" (weak currency, fear of floating, and weak institutional framework). The authors define and discuss two alternative avenues (a "dollar trinity" and a "peso trinity") for developing countries to safely embrace international financial integration while the blessed trinity remains beyond reach. This paper--a product of the Office of the Chief Economist, Latin America and the Caribbean Region, and the Investment Climate Team, Development Research Group--is part of a larger effort in the Bank to assess the implications of financial globalization for emerging economies.
Taking stock of the 2008 global financial crisis, this book provides 'outside the box' solutions for reforming international financial regulation.
The Model Rules of Professional Conduct provides an up-to-date resource for information on legal ethics. Federal, state and local courts in all jurisdictions look to the Rules for guidance in solving lawyer malpractice cases, disciplinary actions, disqualification issues, sanctions questions and much more. In this volume, black-letter Rules of Professional Conduct are followed by numbered Comments that explain each Rule's purpose and provide suggestions for its practical application. The Rules will help you identify proper conduct in a variety of given situations, review those instances where discretionary action is possible, and define the nature of the relationship between you and your clients, colleagues and the courts.
As the accelerated technological advances of the past two decades continue to reshape the United States' economy, intangible assets and high-technology investments are taking larger roles. These developments have raised a number of concerns, such as: how do we measure intangible assets? Are we accurately appraising newer, high-technology capital? The answers to these questions have broad implications for the assessment of the economy's growth over the long term, for the pace of technological advancement in the economy, and for estimates of the nation's wealth. In Measuring Capital in the New Economy, Carol Corrado, John Haltiwanger, Daniel Sichel, and a host of distinguished collaborators offer new approaches for measuring capital in an economy that is increasingly dominated by high-technology capital and intangible assets. As the contributors show, high-tech capital and intangible assets affect the economy in ways that are notoriously difficult to appraise. In this detailed and thorough analysis of the problem and its solutions, the contributors study the nature of these relationships and provide guidance as to what factors should be included in calculations of different types of capital for economists, policymakers, and the financial and accounting communities alike.
This review lays out a research perspective on earnings quality. We provide an overview of alternative definitions and measures of earnings quality and a discussion of research design choices encountered in earnings quality research. Throughout, we focus on a capital markets setting, as opposed, for example, to a contracting or stewardship setting. Our reason for this choice stems from the view that the capital market uses of accounting information are fundamental, in the sense of providing a basis for other uses, such as stewardship. Because resource allocations are ex ante decisions while contracting/stewardship assessments are ex post evaluations of outcomes, evidence on whether, how and to what degree earnings quality influences capital market resource allocation decisions is fundamental to understanding why and how accounting matters to investors and others, including those charged with stewardship responsibilities. Demonstrating a link between earnings quality and, for example, the costs of equity and debt capital implies a basic economic role in capital allocation decisions for accounting information; this role has only recently been documented in the accounting literature. We focus on how the precision of financial information in capturing one or more underlying valuation-relevant constructs affects the assessment and use of that information by capital market participants. We emphasize that the choice of constructs to be measured is typically contextual. Our main focus is on the precision of earnings, which we view as a summary indicator of the overall quality of financial reporting. Our intent in discussing research that evaluates the capital market effects of earnings quality is both to stimulate further research in this area and to encourage research on related topics, including, for example, the role of earnings quality in contracting and stewardship.