Does accounting comparability alleviate the informational disadvantage of foreign investors?11We thank the editor, Professor Carl R. Chen, and two reviewers for their comments that greatly improved the manuscript

Yogesh Chauhan and Surya B. Kumar

International Review of Economics & Finance, 2019, vol. 60, issue C, 114-129

Abstract: The paper examines the benefits of financial accounting comparability for an emerging market. We document the benefits in the form of foreign equity investments. Our empirical results find that foreign investors prefer to invest in firms showing more accounting comparability. Our results also reveal that the benefits of accounting comparability are more prominent when firms have less visibility, operate in a less competitive industry, and have stock prices that reflect a lower level of firm-specific information. We further find that the effect of accounting comparability is lower for domestic mutual fund ownership. Overall, our study suggests that accounting comparability can complement a poor information environment concerning emerging market firms.

Keywords: Foreign investments; Financial accounting comparability; Emerging market; Mutual funds; India (search for similar items in EconPapers)
JEL-codes: G20 G23 G30 M41 (search for similar items in EconPapers)
Date: 2019
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:60:y:2019:i:c:p:114-129

DOI: 10.1016/j.iref.2018.12.018

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