Abstract

https://ssrn.com/abstract=176989
 
 

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The Effect of International Institutional Factors on Properties of Accounting Earnings


Ray Ball


University of Chicago - Accounting

S.P. Kothari


Massachusetts Institute of Technology (MIT) - Sloan School of Management

Ashok Robin


Rochester Institute of Technology (RIT)

August 1999

University of Rochester Working Paper FR 99-12

Abstract:     
International differences in the demand for accounting income predictably affect the way it incorporates economic income (dividend-adjusted change in market value) over time. We characterize the "shareholder" and "stakeholder" corporate governance models of common and code law countries respectively as resolving information asymmetry by public disclosure and private communication. Also, code law directly links accounting income to current payouts (to employees, managers, shareholders and governments). Consequently, code law accounting income is less timely, particularly in incorporating economic losses. Regulation, taxation and litigation cause variation among common law countries. The results have implications for security analysts, standard-setters, regulators, and corporate governance.

Number of Pages in PDF File: 49

JEL Classification: F30, M41, M44, M47


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Date posted: September 15, 1999  

Suggested Citation

Ball, Ray and Kothari, S.P. and Robin, Ashok, The Effect of International Institutional Factors on Properties of Accounting Earnings (August 1999). University of Rochester Working Paper FR 99-12. Available at SSRN: https://ssrn.com/abstract=176989 or http://dx.doi.org/10.2139/ssrn.176989

Contact Information

Ray Ball (Contact Author)
University of Chicago - Accounting ( email )

Chicago Booth School of Business Logo

S.P. Kothari
Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )
E52-325
Cambridge, MA 02142
United States
617-253-0994 (Phone)
617-253-0603 (Fax)

Ashok Robin
Rochester Institute of Technology (RIT) ( email )
College of Business
Rochester, NY 14623
United States
585-475 5211 (Phone)
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References:  60
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