Disclosure Practices of Foreign Companies Interacting with U.S. Markets (original) (raw)

55 Pages Posted: 26 May 2003

Tarun Khanna

Harvard University - Strategy Unit

Krishna Palepu

Harvard University - Harvard Business School; Harvard University - David Rockefeller Center for Latin American Research; Harvard Business Review; NBER; International Academy of Management

Suraj Srinivasan

Harvard Business School

Multiple version iconThere are 2 versions of this paper

Date Written: December 2003

Abstract

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.

Keywords: Disclosure, Globalization, Corporate Governance, Accounting

JEL Classification: F16, F20, G15, G34, M41, M45, M47

Suggested Citation: Suggested Citation

Khanna, Tarun and Palepu, Krishna and Srinivasan, Suraj, Disclosure Practices of Foreign Companies Interacting with U.S. Markets (December 2003). Harvard Business School Strategy Unit Working Paper No. 03-081, Harvard NOM Working Paper No. 03-29, Available at SSRN: https://ssrn.com/abstract=408621 or http://dx.doi.org/10.2139/ssrn.408621