Voluntary Disclosure Practices by Foreign Firms Cross-Listed in the United States

47 Pages Posted: 10 May 2010 Last revised: 14 Jan 2013

See all articles by Ole-Kristian Hope

Ole-Kristian Hope

University of Toronto - Rotman School of Management

Tony Kang

University of Nebraska - Lincoln

Joung W. Kim

Nova Southeastern University; Nova Southeastern University - H. Wayne Huizenga School of Business & Entrepreneurship

Multiple version iconThere are 2 versions of this paper

Date Written: January 14, 2013

Abstract

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.

Keywords: Cross-listing, Voluntary Disclosure, Management Guidance, Legal Quality, Reg FD, Exchange Listing

JEL Classification: F30, F23, F21, G15, G3, K22, M41

Suggested Citation

Hope, Ole-Kristian and Kang, Tony and Kim, Joung W. and Kim, Joung W., Voluntary Disclosure Practices by Foreign Firms Cross-Listed in the United States (January 14, 2013). Available at SSRN: https://ssrn.com/abstract=1601273 or http://dx.doi.org/10.2139/ssrn.1601273

Ole-Kristian Hope (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

HOME PAGE: http://www.rotman.utoronto.ca/FacultyAndResearch/Faculty/FacultyBios/Hope.aspx

Tony Kang

University of Nebraska - Lincoln ( email )

307 College of Business Administration
Lincoln, NE 68588-0488
United States

Joung W. Kim

Nova Southeastern University ( email )

3301 College Avenue
Ft. Lauderdale, FL 33314
954-262-5110 (Phone)
954-262-3974 (Fax)

Nova Southeastern University - H. Wayne Huizenga School of Business & Entrepreneurship ( email )

3301 College Ave.
Ft. Lauderdale, FL 33314
United States
954-262-5110 (Phone)

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