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Accounting quality and countries institutional characteristics: Evidence from multinational firms

Author

Listed:
  • Nizar Berrim

    (Sidi Alouane 5190, Mahdia, Tunisia)

  • Imen Ghadhab

    (Sidi Alouane 5190, Mahdia, Tunisia)

  • Hamza Nizar

    (Sidi Alouane 5190, Mahdia, Tunisia)

Abstract

This paper investigates the dynamics of cross-listing in the US and accounting quality. Using an unbalanced panel of 11,780 observations for the period 2000–2019, we show that cross-listing improves accounting quality (in terms of conservatism, earnings management and informational relevance). This result holds for both types of cross-listing (i.e., exchange and OTC listing). Moreover, taking institutional variables into account leads to the conclusion that companies from countries with a weak legal and informational environment have better accounting quality following compliance with the strict standards of shareholder protection and disclosure of information imposed by US authorities. Finally, a complementary analysis shows us that companies listed in the US benefit from a better accounting quality record and less investment inefficiency. This explains why cross-listing in the US reduces the inefficiency of investments thanks to better accounting quality.

Suggested Citation

  • Nizar Berrim & Imen Ghadhab & Hamza Nizar, 2024. "Accounting quality and countries institutional characteristics: Evidence from multinational firms," International Journal of Financial Engineering (IJFE), World Scientific Publishing Co. Pte. Ltd., vol. 11(01), pages 1-25, March.
  • Handle: RePEc:wsi:ijfexx:v:11:y:2024:i:01:n:s2424786323500640
    DOI: 10.1142/S2424786323500640
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