This dissertation investigates whether harmonization of accounting standards enhances the comparability of financial information across countries. In the first chapter, I statistically define and link comparability to firm value in a theoretical framework. Based on a two-firm, sequential information release setting, I show that a firm yet to announce earnings reacts more strongly to the earnings announcement of a foreign firm when both report under the same rather than different accounting standards. The second chapter provides associated empirical evidence. First, my analysis of abnormal price and volume reactions for a global sample of firms supports the theoretical prediction. Next, in an attempt to control for the underlying economic comparability and the effects of changes in reporting quality, I use a difference-in-differences design around the mandatory introduction of International Financial Reporting Standards (IFRS). I find that mandatory adopters experience a significant increase in market reactions to the release of earnings by voluntary adopters compared to pre-mandatory adoption. This increase is not observed for non-adopters over the same period. Taken together, this dissertation shows that accounting standards harmonization facilitates transnational information transfer, and suggests financial statement comparability as a direct mechanism.
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