Empirical Evidence on the Evolution of International Earnings
42 Pages Posted: 20 Jul 2000
Date Written: May 30, 2000
We examine cross-country differences in the valuation and time series characteristics of earnings to assess whether there have been systematic changes over time. Our results suggest that earnings multiples have become more similar, although systematic differences remain. Potential economic determinants (e.g., growth rates, interest rates, and returns) do not exhibit similar convergence and do not appear to explain the changes. The convergence is robust to controls for cash flow multiples and is apparent in the valuation of accruals. Accrual/cash flow correlations have also become more similar and generally less negative, suggesting a reduction in earnings smoothing. Overall, our evidence suggests convergence in accounting practice.
Note: Previously titled "Empirical Evidence on the Evolution of Global Accounting"
Keywords: International accounting, International valuation, Accounting harmonization, Accounting multiples
JEL Classification: M41, M44, M47, G15
Suggested Citation: Suggested Citation