IDEAS home Printed from https://ideas.repec.org/a/pal/jintbs/v14y1983i1p113-131.html
   My bibliography  Save this article

Analyzing Foreign Financial Statements: The Use and Misuse of International Ratio Analysis

Author

Listed:
  • Frederick D S Choi

    (New York University)

  • Hisaaki Hino

    (Morgan Guaranty Trust Company)

  • Sang Kee Min

    (Seoul National University)

  • Sang Oh Nam

    (Seoul National University)

  • Junichi Ujiie

    (The Normura Securities Company, Ltd.)

  • Arthur I Stonehill

    (Oregon State University)

Abstract

Financial ratios, which may be appropriate measures of financial risk and return, are often misused when applied to foreign companies. This is due partly to explainable differences on international accounting principles. A more serious problem, however, is that even when ratios are based on U.S. GAAP, they are misinterpreted because the U.S. investor does not understand a particular foreign environment that influences all financial ratios in that environment. Using Japan and Korea as country examples, this paper analyzes the problem of misuse of international ratio analysis with the hope that investors, security analysts, regulatory authorities, and international business researchers will become more aware of the pitfalls.© 1983 JIBS. Journal of International Business Studies (1983) 14, 113–131

Suggested Citation

  • Frederick D S Choi & Hisaaki Hino & Sang Kee Min & Sang Oh Nam & Junichi Ujiie & Arthur I Stonehill, 1983. "Analyzing Foreign Financial Statements: The Use and Misuse of International Ratio Analysis," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 14(1), pages 113-131, March.
    • Handle: RePEc:pal:jintbs:v:14:y:1983:i:1:p:113-131
    as

    Download full text from publisher

    File URL: http://www.palgrave-journals.com/jibs/journal/v14/n1/pdf/8490510a.pdf
    File Function: Link to full text PDF
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: http://www.palgrave-journals.com/jibs/journal/v14/n1/full/8490510a.html
    File Function: Link to full text HTML
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

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

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ding, Yuan & Richard, Jacques & Stolowy, Hervé, 2008. "Towards an understanding of the phases of goodwill accounting in four Western capitalist countries: From stakeholder model to shareholder model," Accounting, Organizations and Society, Elsevier, vol. 33(7-8), pages 718-755.
    2. Carol Adams & Pauline Weetman & Edward Jones & Sidney Gray, 1999. "Reducing the burden of US GAAP reconciliations by foreign companies listed in the United States: the key question of materiality," European Accounting Review, Taylor & Francis Journals, vol. 8(1), pages 1-22.
    3. Cheung, Joseph K. & Kim, Jeong-Bon & Lee, Jason, 1999. "The Impact of Institutional Characteristics on Return-Earnings Associations in Japan," The International Journal of Accounting, Elsevier, vol. 34(4), pages 571-596, 010.
    4. Hong Bae, Kee & Kim, Jeong-Bon, 1998. "The usefulness of earnings versus book value for predicting stock returns and cross corporate ownership in Japan," Japan and the World Economy, Elsevier, vol. 10(4), pages 467-485, October.
    5. Chang, Chun, 1999. "Capital structure as optimal contracts," The North American Journal of Economics and Finance, Elsevier, vol. 10(2), pages 363-385.
    6. Lainez, Jose A. & Callao, Susana, 2000. "The effect of accounting diversity on international financial analysis: empirical evidence," The International Journal of Accounting, Elsevier, vol. 35(1), pages 65-83, March.
    7. Gordon, Elizabeth A., 2001. "International Accounting: A User Perspective: by Shahrokh M. Saudagaran South-Western College Publishing/Thomson Learning, Cincinnati, Ohio, 2001, xii+228 pp," The International Journal of Accounting, Elsevier, vol. 36(1), pages 117-119, February.
    8. Clatworthy, Mark & Jones, Michael John, 2008. "Overseas equity analysis by UK analysts and fund managers," The British Accounting Review, Elsevier, vol. 40(4), pages 337-355.

    More about this item

    Statistics

    Access and download statistics

    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:pal:jintbs:v:14:y:1983:i:1:p:113-131. 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.

    We have no bibliographic references for this item. You can help adding them by using 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: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.palgrave-journals.com/ .

    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.