Value relevance of financial information reported by foreign firms: Evidence from financial analysts and trading volume.

摘要

A controversial area of U.S. securities regulations involves the SEC's financial reporting requirements for foreign firms. Specifically, the necessity of providing a quantitative reconciliation (Form 20-F) to U.S. GAAP is the focus of the debate. The results of earnings-returns research to date indicate that the release of earnings information prepared under foreign GAAP provides value relevant information. However, the results of earnings-returns studies using reconciled information are mixed. Instead of using an earnings-returns methodology adopted in prior research, this study utilizes analysts, revisions and trading volume as market indicators to investigate the reaction of users to the earnings announcement and Form 20-F filings.; The study has two objectives. First, the value relevance of the earnings announcement and the filing of Form 20-F is measured by analysts, revisions and trading volume. The results indicate that the release of firms' earnings prepared under foreign GAAP (at earnings announcement dates) contains relevant information as measured by analysts, revisions and trading volume. Likewise, the filing of reconciled information in Form 20-F is a value relevant event, again measured by analysts' revisions and trading volume.; The second objective is to determine if firm-specific variables in the firm's information environment systematically affect analysts, revisions and trading volume at the time of filing Form 20-F. Four variables—similarities of accounting systems, number of analysts following the firm, change in reconciled earnings, and dispersion of analysts, expectations—are used in multiple regression models to explain the variation observed in analysts, revisions and trading volume. The variation in analysts, revisions is associated with the number of analysts following the firm, change in reconciled earnings, and dispersion of analysts' expectations. In the trading volume model, similarities of accounting systems and dispersion of analysts' expectations are related to trading volume.