Disclosure Practices of Foreign Companies Interacting with U.S. Markets
Harvard University - Strategy Unit
Harvard University - Harvard Business School; Harvard University - David Rockefeller Center for Latin American Research; Harvard Business Review; NBER; International Academy of Management
Harvard Business School
Harvard Business School Strategy Unit Working Paper No. 03-081
Harvard NOM Working Paper No. 03-29
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 & 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.
Number of Pages in PDF File: 55
Keywords: Disclosure, Globalization, Corporate Governance, Accounting
JEL Classification: F16, F20, G15, G34, M41, M45, M47
Date posted: May 26, 2003
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