IDEAS home Printed from https://ideas.repec.org/a/eee/accoun/v44y2009i3p279-304.html
   My bibliography  Save this article

The impact of securities regulation on the earnings properties of European cross-listed firms

Author

Listed:
  • Cabán-García, María T.

Abstract

The objective of this study was to determine if the securities regulation in a foreign country is related to the earnings quality of European firms cross-listed in Europe. The study compared the post-listing earnings quality of 112 European firms cross-listed in 13 European stock exchanges during 1989-2001 to those of a controlled sample of non-cross-listed firms. Earnings quality was assessed by the use of reporting discretion to manage earnings. The regulatory strictness was represented by three indices of securities regulation. Empirical results provide some support to a positive association between earnings quality and the foreign securities regulation, suggesting that the foreign regulatory requirements have little or no effect on the reported earnings of European firms cross-listed in European exchanges.

Suggested Citation

  • Cabán-García, María T., 2009. "The impact of securities regulation on the earnings properties of European cross-listed firms," The International Journal of Accounting, Elsevier, vol. 44(3), pages 279-304, September.
    • Handle: RePEc:eee:accoun:v:44:y:2009:i:3:p:279-304
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0020-7063(09)00049-1
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Doidge, Craig & Karolyi, G. Andrew & Stulz, Rene M., 2004. "Why are foreign firms listed in the U.S. worth more?," Journal of Financial Economics, Elsevier, vol. 71(2), pages 205-238, February.
    2. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer, 2006. "What Works in Securities Laws?," Journal of Finance, American Finance Association, vol. 61(1), pages 1-32, February.
    3. Marco Pagano & Ailsa A. Röell & Josef Zechner, 2002. "The Geography of Equity Listing: Why Do Companies List Abroad?," Journal of Finance, American Finance Association, vol. 57(6), pages 2651-2694, December.
    4. Luzi Hail & Christian Leuz, 2006. "International Differences in the Cost of Equity Capital: Do Legal Institutions and Securities Regulation Matter?," Journal of Accounting Research, Wiley Blackwell, vol. 44(3), pages 485-531, June.
    5. Pagano, Marco & Randl, Otto & Roell, Ailsa A. & Zechner, Josef, 2001. "What makes stock exchanges succeed? Evidence from cross-listing decisions," European Economic Review, Elsevier, vol. 45(4-6), pages 770-782, May.
    6. Juan Manuel García Lara & Beatriz García Osma & Araceli Mora, 2005. "The Effect of Earnings Management on the Asymmetric Timeliness of Earnings," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 32(3‐4), pages 691-726, April.
    7. Ball, Ray & Kothari, S. P. & Robin, Ashok, 2000. "The effect of international institutional factors on properties of accounting earnings," Journal of Accounting and Economics, Elsevier, vol. 29(1), pages 1-51, February.
    8. Philip Brown & Ann Tarca, 2005. "A commentary on issues relating to the enforcement of International Financial Reporting Standards in the EU," European Accounting Review, Taylor & Francis Journals, vol. 14(1), pages 181-212.
    9. In‐Mu Haw & Bingbing Hu & Lee‐Seok Hwang & Woody Wu, 2004. "Ultimate Ownership, Income Management, and Legal and Extra‐Legal Institutions," Journal of Accounting Research, Wiley Blackwell, vol. 42(2), pages 423-462, May.
    10. Mark Lang & Jana Smith Raedy & Michelle Higgins Yetman, 2003. "How Representative Are Firms That Are Cross‐Listed in the United States? An Analysis of Accounting Quality," Journal of Accounting Research, Wiley Blackwell, vol. 41(2), pages 363-386, May.
    11. Shahrokh M Saudagaran & Gary C Biddle, 1995. "Foreign Listing Location: A Study of MNCs and Stock Exchanges in Eight Countries," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 26(2), pages 319-341, June.
    12. Bhattacharya, Utpal & Daouk, Hazem & Welker, Michael, 2003. "The World Price of Earnings Opacity," Working Papers 127185, Cornell University, Department of Applied Economics and Management.
    13. Rene M. Stulz, 1999. "Globalization of Equity Markets and the Cost of Capital," NBER Working Papers 7021, National Bureau of Economic Research, Inc.
    14. Ball, Ray & Robin, Ashok & Wu, Joanna Shuang, 2003. "Incentives versus standards: properties of accounting income in four East Asian countries," Journal of Accounting and Economics, Elsevier, vol. 36(1-3), pages 235-270, December.
    15. Leuz, Christian & Nanda, Dhananjay & Wysocki, Peter D., 2003. "Earnings management and investor protection: an international comparison," Journal of Financial Economics, Elsevier, vol. 69(3), pages 505-527, September.
    16. Juan Manuel García Lara & Beatriz García Osma & Araceli Mora, 2005. "The Effect of Earnings Management on the Asymmetric Timeliness of Earnings," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 32(3‐4), pages 691-726, April.
    17. Ashbaugh, Hollis, 2001. "Non-US Firms' Accounting Standard Choices," Journal of Accounting and Public Policy, Elsevier, vol. 20(2), pages 129-153.
    18. Carol Ann Frost & Elizabeth A. Gordon & Andrew F. Hayes, 2006. "Stock Exchange Disclosure and Market Development: An Analysis of 50 International Exchanges," Journal of Accounting Research, Wiley Blackwell, vol. 44(3), pages 437-483, June.
    19. Oren Fuerst, 1998. "A Theoretical Analysis of the Investor Protection Regulations Argument for Global Listing of Stocks," Yale School of Management Working Papers ysm106, Yale School of Management.
    20. Jones, Jj, 1991. "Earnings Management During Import Relief Investigations," Journal of Accounting Research, Wiley Blackwell, vol. 29(2), pages 193-228.
    21. Sherman Cheung, C. & Lee, Jason, 1995. "Disclosure environment and listing on foreign stock exchanges," Journal of Banking & Finance, Elsevier, vol. 19(2), pages 347-362, May.
    22. Ball, Ray & Kothari, S. P. & Robin, Ashok, 2000. "Corrigendum to "The effect of international institutional factors on properties of accounting earnings"; [Journal of Accounting and Economics 29 (2000) 1-51]," Journal of Accounting and Economics, Elsevier, vol. 30(2), pages 241-241, October.
    23. Reese, William Jr. & Weisbach, Michael S., 2002. "Protection of minority shareholder interests, cross-listings in the United States, and subsequent equity offerings," Journal of Financial Economics, Elsevier, vol. 66(1), pages 65-104, October.
    24. Kothari, S.P. & Leone, Andrew J. & Wasley, Charles E., 2005. "Performance matched discretionary accrual measures," Journal of Accounting and Economics, Elsevier, vol. 39(1), pages 163-197, February.
    25. Othman, Hakim Ben & Zeghal, Daniel, 2006. "A study of earnings-management motives in the Anglo-American and Euro-Continental accounting models: The Canadian and French cases," The International Journal of Accounting, Elsevier, vol. 41(4), pages 406-435, 012.
    26. Ali, A & Hwang, LS, 2000. "Country-specific factors related to financial reporting and the value relevance of accounting data," Journal of Accounting Research, Wiley Blackwell, vol. 38(1), pages 1-21.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Dechow, Patricia & Ge, Weili & Schrand, Catherine, 2010. "Understanding earnings quality: A review of the proxies, their determinants and their consequences," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 344-401, December.
    2. Cristina Gaio, 2010. "The Relative Importance of Firm and Country Characteristics for Earnings Quality around the World," European Accounting Review, Taylor & Francis Journals, vol. 19(4), pages 693-738.
    3. Anagnostopoulou, Seraina C., 2017. "Accounting Quality and Loan Pricing: The Effect of Cross-country Differences in Legal Enforcement," The International Journal of Accounting, Elsevier, vol. 52(2), pages 178-200.
    4. Priyesh Valiya Purayil & Jijo Lukose P. J., 2022. "Does cross‐border acquisition reduce earnings management of emerging market acquirers? Evidence from India," International Review of Finance, International Review of Finance Ltd., vol. 22(1), pages 143-168, March.
    5. Leuz, Christian, 2006. "Cross listing, bonding and firms' reporting incentives: A discussion of Lang, Raedy and Wilson (2006)," Journal of Accounting and Economics, Elsevier, vol. 42(1-2), pages 285-299, October.
    6. Christian Leuz & Peter D. Wysocki, 2016. "The Economics of Disclosure and Financial Reporting Regulation: Evidence and Suggestions for Future Research," Journal of Accounting Research, Wiley Blackwell, vol. 54(2), pages 525-622, May.
    7. Erik Peek & Roger Meuwissen & Frank Moers & Ann Vanstraelen, 2012. "Comparing Abnormal Accruals Estimates across Samples: An International Test," European Accounting Review, Taylor & Francis Journals, vol. 22(3), pages 533-572, September.
    8. Juan Manuel García Lara & Beatriz García Osma & Belén Gill de Albornoz Noguer, 2006. "Effects of database choice on international accounting research," Abacus, Accounting Foundation, University of Sydney, vol. 42(3‐4), pages 426-454, September.
    9. Karampinis, Nikolaos I. & Hevas, Dimosthenis L., 2011. "Mandating IFRS in an Unfavorable Environment: The Greek Experience," The International Journal of Accounting, Elsevier, vol. 46(3), pages 304-332, September.
    10. Iatridis, George, 2010. "International Financial Reporting Standards and the quality of financial statement information," International Review of Financial Analysis, Elsevier, vol. 19(3), pages 193-204, June.
    11. Christian Leuz, 2010. "Different approaches to corporate reporting regulation: How jurisdictions differ and why," Accounting and Business Research, Taylor & Francis Journals, vol. 40(3), pages 229-256.
    12. Hail, Luzi & Leuz, Christian, 2009. "Cost of capital effects and changes in growth expectations around U.S. cross-listings," Journal of Financial Economics, Elsevier, vol. 93(3), pages 428-454, September.
    13. Himanshu & Jatinder P. Singh & Ashwani Kumar, 2020. "Prioritizing and Establishing Cause and Effect Relationships Among Financial Reporting Quality Metrics," Vision, , vol. 24(3), pages 330-344, September.
    14. Kim, Yongtae & Li, Haidan & Li, Siqi, 2012. "Does eliminating the Form 20-F reconciliation from IFRS to U.S. GAAP have capital market consequences?," Journal of Accounting and Economics, Elsevier, vol. 53(1), pages 249-270.
    15. Gomez Biscarri, Javier & Lopez Espinosa, German, 2008. "The influence of differences in accounting standards on empirical pricing models: An application to the Fama-French model," Journal of Multinational Financial Management, Elsevier, vol. 18(4), pages 369-388, October.
    16. Liu, Xiang & Saidi, Reza & Bazaz, Mohammad, 2014. "Institutional incentives and earnings quality: The influence of government ownership in China," Journal of Contemporary Accounting and Economics, Elsevier, vol. 10(3), pages 248-261.
    17. Kamarudin, Khairul Anuar & Ariff, Akmalia M. & Jaafar, Aziz, 2020. "Investor protection, cross-listing and accounting quality," Journal of Contemporary Accounting and Economics, Elsevier, vol. 16(1).
    18. Sarkissian, Sergei & Schill, Michael J., 2012. "The nature of the foreign listing premium: A cross-country examination," Journal of Banking & Finance, Elsevier, vol. 36(9), pages 2494-2511.
    19. Isidro, Helena & Raonic, Ivana, 2012. "Firm incentives, institutional complexity and the quality of “harmonized” accounting numbers," The International Journal of Accounting, Elsevier, vol. 47(4), pages 407-436.
    20. Christian Leuz & Karl V. Lins & Francis E. Warnock, 2010. "Do Foreigners Invest Less in Poorly Governed Firms?," Review of Financial Studies, Society for Financial Studies, vol. 23(3), pages 3245-3285, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:accoun:v:44:y:2009:i:3:p:279-304. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/620179 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.