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

Ole-Kristian Hope

University of Toronto - Rotman School of Management

Tony Kang

McMaster University - DeGroote School of Business

Joung W. Kim

January 14, 2013

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.

Number of Pages in PDF File: 47

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

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

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Date posted: May 10, 2010 ; Last revised: January 14, 2013

Suggested Citation

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

Contact Information

Ole-Kristian Hope (Contact Author)
University of Toronto - Rotman School of Management ( email )
105 St. George Street
Toronto, Ontario M5S 3E6
HOME PAGE: http://www.rotman.utoronto.ca/FacultyAndResearch/Faculty/FacultyBios/Hope.aspx

Tony Kang
McMaster University - DeGroote School of Business ( email )
1280 Main Street West
Hamilton, ON L8S 4M4
905-525-9140 x23846 (Phone)
905-521-8995 (Fax)
HOME PAGE: http://www.degroote.mcmaster.ca/profiles/tony-kang/
No contact information is available for Joung W. Kim
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