Disclosure Practices of Foreign Companies Interacting with U.S. Markets

By Tarun Khanna, K. Palepu, Suraj Srinivasan. 2004

386 citations recorded by the source corpus.

We analyze the disclosure practices of companies as a function of their interaction with U.S. markets for a group of 794 firms from 24 countries in the Asia-Pacific and Europe. Our analysis uses the Transparency and Disclosure scores developed recently by Standard & 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 U.S. listing, U.S. investment flows, exports to, and operations in the United States. Trade with the United States at the country level, 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.

Subfields: Accounting, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/782ca6bbf61d2cf89c91cd2370fb612f878fb5ed

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Citations in the corpus

Scrutiny, Norms, and Selective Disclosure: A Global Study of Greenwashing (2016, neutral): “Foreign listings typically require companies to be more transparent about their accounting policies, board and management structure, and ownership structure (Khanna, Palepu, and Srinivasan, 2004).”
Corporate Disclosures by Family Firms (2007, neutral): “…and Director Training and Compensation (#11), the scores for family firms are significantly different than that for non-family firms, with t-statistics of 4.51, 15 Khanna, Palepu, and Srinivasan (2004) use this database to examine differences in disclosure practices of companies across countries.”
Factors influencing the disclosure of greenhouse gas emissions in companies world‐wide (2009, background): “Other works (e.g. Khanna et al., 2004; Gul and Leung, 2004) obtain a positive influence of profitability on the amount of voluntary disclosure, both in multinational companies listed on NYSE and in quoted companies from Hong-Kong, respectively.”
Financial statement comparability and credit risk (2013, neutral): “…financial reporting regimes, such as the extent of US-institutional ownership in firms in different countries internationally, affect comparability (Khanna et al. 2004, Bradshaw et al. 2004, Fang et al. 2012); and (3) differences in firms’ proprietary costs influence the extent of their…”
The Economics of Disclosure and Financial Reporting Regulation: Evidence and Suggestions for Future Research (2015, neutral): “They are available for large firms across a number of countries and often averaged at the country level (e.g., La Porta et al., 1998; Hope, 2003; Leuz et al., 2003; Khanna et al., 2004; Doidge et al., 2007).”
Convergence of Corporate Governance: Critical Review and Future Directions (2009, background): “ Khanna et al., 2004 2002 794 firms in 24 countries DV: information disclosure (overall and financial transparency)”
Does Corporate Governance Transparency Affect the Accuracy of Analyst Forecasts (2006, background): “Lang et al. (2003) and Khanna et al. (2004) find that ADR firms are more ‘advanced’ in several dimensions than non-ADR firms.”
Accounting Choice, Home Bias, and US Investment in Non-US Firms (2004, neutral): “Finally, in addition to using a US sales measure, concurrent research also examines an indicator for US assets (Khanna et al. [2003]).”
Why Do Countries Matter so Much for Corporate Governance (2007, methodology): “The Standard & Poor’s ratings, constructed for a study by S&P launched in 2001, have also been used in recent research (Khanna, Palepu, and Srinivasan, 2004; Durnev and Kim, 2005; Patel, Balic, and Bwakira, 2002, provide a description of the S&P measure, and Bushee, 2004, provides an extensive…”