Abstract

http://ssrn.com/abstract=2172429
 
 

Footnotes (25)



 


 



Foreign Institutional Ownership and the Global Convergence of Financial Reporting Practices


Vivian W. Fang


University of Minnesota - Twin Cities - Department of Accounting

Mark G. Maffett


University of Chicago - Booth School of Business

Bohui Zhang


University of New South Wales (UNSW) - School of Banking and Finance; Financial Research Network (FIRN); Centre for International Finance and Regulation (CIFR)

January 29, 2014


Abstract:     
We investigate whether institutional investors affect the convergence of financial reporting practices worldwide. Using the De Franco et al. (2011) accounting comparability measure, we document that an interquartile shift in U.S. mutual fund ownership is associated with a 15.4% increase in emerging market firms’ comparability with their U.S. industry peers. We identify the effect of U.S. ownership on comparability using an instrumental variable approach, which exploits variation in U.S. mutual fund ownership generated by the 2003 JGTRRA act, and by demonstrating that the effect varies predictably with U.S. institutions’ monitoring incentives. Consistent with U.S. ownership increasing comparability, we show that, relative to domestic analysts, foreign analysts’ forecast errors and dispersion decrease following increases in U.S. ownership. Finally, we provide evidence that the appointment of U.S. independent directors to the board and audit committee and the hiring of an international auditor are potential channels through which U.S. institutions affect comparability.

Number of Pages in PDF File: 55

Keywords: Institutional Investors; Mutual Funds; Corporate Governance; U.S. GAAP; Financial Statement Comparability; Analyst Forecasts

JEL Classification: G32, G34, G38, M41, M47

working papers series


Download This Paper

Date posted: November 7, 2012 ; Last revised: January 30, 2014

Suggested Citation

Fang, Vivian W. and Maffett, Mark G. and Zhang, Bohui, Foreign Institutional Ownership and the Global Convergence of Financial Reporting Practices (January 29, 2014). Available at SSRN: http://ssrn.com/abstract=2172429 or http://dx.doi.org/10.2139/ssrn.2172429

Contact Information

Vivian W. Fang
University of Minnesota - Twin Cities - Department of Accounting ( email )
321 19th Avenue South
Room 3-109
Minneapolis, MN 55455
United States
Mark G. Maffett (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States

Chicago Booth School of Business Logo

Bohui Zhang
University of New South Wales (UNSW) - School of Banking and Finance ( email )
Australian School of Business
Sydney NSW, 2052
Australia
61293855834 (Phone)
61293856347 (Fax)
HOME PAGE: http://www.banking.unsw.edu.au/nps/servlet/portalservice?GI_ID=System.LoggedOutInheritableArea&maxWn

Financial Research Network (FIRN)
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia
HOME PAGE: http://www.firn.org.au

Centre for International Finance and Regulation (CIFR) ( email )
Level 7, UNSW CBD Campus
1 O'Connell Street
Sydney, NSW 2000
Australia
Feedback to SSRN


Paper statistics
Abstract Views: 1,201
Downloads: 331
Download Rank: 48,808
Footnotes:  25

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo4 in 0.485 seconds