Does accounting choice influence US investment in non-US companies? Evidence from US institutional investment in Australian companies

Chugh, Shrutika and Fargher, Neil 2008, Does accounting choice influence US investment in non-US companies? Evidence from US institutional investment in Australian companies, Accounting and finance, vol. 48, no. 1, pp. 99-121.

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Title Does accounting choice influence US investment in non-US companies? Evidence from US institutional investment in Australian companies
Author(s) Chugh, Shrutika
Fargher, Neil
Journal name Accounting and finance
Volume number 48
Issue number 1
Start page 99
End page 121
Publisher Wiley-Blackwell Publishing Asia
Place of publication Milton, Qld.
Publication date 2008-03
ISSN 0810-5391
1467-629X
Keyword(s) accounting policy choice
US investment
home country bias
Summary Previous research asserts that companies that choose accounting methods more familiar to investors reduce information asymmetry and increase credibility of their financial statements to those investors, thereby attracting higher levels of foreign investment. This study examines the variation in accounting policies associated with institutional investment in Australian equity. The results suggest that large US institutional holdings in Australian companies are associated with American Depositary Receipt listing and, incrementally, choice of accounting methods that conform to US Generally Accepted Accounting Principles (GAAP). Although making accounting choices in compliance with US GAAP is significantly associated with higher levels of institutional ownership in a statistical sense, examination of the specific differences in accounting choices suggests that the differences in informational content are relatively minor.
Language eng
Field of Research 150199 Accounting, Auditing and Accountability not elsewhere classified
Socio Economic Objective 970114 Expanding Knowledge in Economics
HERDC Research category C1.1 Refereed article in a scholarly journal
Copyright notice ©2008, The Authors
Persistent URL http://hdl.handle.net/10536/DRO/DU:30033377

Document type: Journal Article
Collection: School of Accounting, Economics and Finance
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