 Do foreign investors make firms more transparent? Evidence from KoreaJunyong Lee and Frederick Dongchuhl Oh Journal of Multinational Financial Management, 2024, vol. 74, issue C Abstract: In this study, we investigate whether foreign equity participation enhances the level of transparency in Korean listed firms’ accounting information. Using panel data on the Korean listed firms during the 1999–2019 period, we find that foreign ownership has a positive effect on the accounting transparency of firms. This suggests that foreign investors effectively monitor the earnings management activities of a firm and contribute to increasing the quality of accounting information. In addition, this positive impact of foreign equity ownership is more pronounced in non-chaebol firms than in chaebols. We further show that foreign investors reinforce the effect of changes in accounting systems on the transparency of Korean firms. Finally, firms with enhanced transparency by foreign investors perform better in the future. Overall, our study highlights the importance of foreign investors for enhancing accounting transparency in the Korean stock market. (JEL F21, F65, G15, G30, M40) Keywords: Foreign Ownership; Transparency; Earnings Management; Chaebol (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:mulfin:v:74:y:2024:i:c:s1042444x24000252 DOI: 10.1016/j.mulfin.2024.100860 Access Statistics for this article Journal of Multinational Financial Management is currently edited by I. Mathur and G. G. Booth More articles in Journal of Multinational Financial Management from Elsevier |
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