Foreign Institutional Ownership and the Global Convergence of Financial Reporting Practices

• 成果类型: Article
• 署名作者: Fang, Vivian W.; Maffett, Mark; Zhang, Bohui
• 署名单位: University of Minnesota System; University of Minnesota Twin Cities; University of Chicago; University of New South Wales Sydney
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456
• DOI: 10.1111/1475-679X.12076
• 发表日期: 2015
• 页码: 593-631
• 关键词: large shareholders; corporate governance; earnings; liquidity; Informativeness; STANDARDS; investors; EVOLUTION; adoption; QUALITY

摘要

This paper investigates whether foreign institutional investors affect the global convergence of financial reporting practices. Using several measures of reporting convergence, we show that U.S. institutional ownership is positively associated with subsequent changes in emerging market firms' accounting comparability to their U.S. industry peers. We identify this association using an instrumental variable approach that exploits exogenous variation in U.S. institutional investment generated by the JGTRRA Act of 2003. Further, we provide evidence of a specific mechanismthe switch to a Big Four audit firmthrough which U.S. institutional investors affect reporting convergence. Finally, we show that, for emerging market firms, an increase in comparability to U.S. firms is associated with an improvement in the properties of foreign analysts' forecasts.