Disclosure Practices of Foreign Companies Interacting with U.S. Markets

Posted: 9 Aug 2004

See all articles by Tarun Khanna

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

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Abstract

We analyze the disclosure practices of companies as a function of their interaction with U.S. markets for a group of 794 firms from 24 countries in the 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 U.S. listing, U.S. investment flows, exports to, and operations in the United States. Trade with the United States at the country level, 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, convergence, corporate governance, accounting

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

Suggested Citation

Khanna, Tarun and Palepu, Krishna and Srinivasan, Suraj, Disclosure Practices of Foreign Companies Interacting with U.S. Markets. Journal of Accounting Research, Vol. 42, No. 2, May 2004, Available at SSRN: https://ssrn.com/abstract=484002

Tarun Khanna (Contact Author)

Harvard University - Strategy Unit ( email )

Harvard Business School
Boston, MA 02163
United States
617-495-6038 (Phone)
617-495-0355 (Fax)

Krishna Palepu

Harvard University - Harvard Business School ( email )

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Harvard University - David Rockefeller Center for Latin American Research ( email )

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NBER ( email )

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International Academy of Management ( email )

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Suraj Srinivasan

Harvard Business School ( email )

Soldiers Field
Boston, MA 02163
United States

HOME PAGE: http://www.hbs.edu/faculty/Pages/profile.aspx?facId=10700

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