Discussion of Disclosure Practices of Foreign Companies Interacting with U.S. Markets

摘要

KPS provide compelling evidence that the level of interactions a non-U.S. firm has with the U.S. capital, product, and labor markets is associated with the use of U.S. disclosure practices. This paper should broaden the focus of the literature beyond simple capital market incentives for disclosure into a recognition that managers must trade off interactions in other markets as well to determine the optimal to disclosure policy. The paper also provides interesting suggestive evidence on the debate over international convergence in governance systems by finding that there has been partial convergence in disclosure practices with a U.S. model both at the country and firm level. Finally, KPS use a new disclosure index provided by S&P that has many promising future applications. Future research should build on KPS's ambitious start to investigate the following areas. First, the use of time-series data and separate examinations of mandatory and voluntary disclosure practices could provide more insight into the degree of convergence in countries' institutions versus convergence in firm's practices and on the causality of the relations between disclosure practices and product and labor market interactions. To answer these questions, researchers could used detailed CIFAR and S&P data to identify countries and firms with big changes in disclosure practices over time and countries with different emphases in disclosure areas. Another interesting context for answering these questions would be to identify countries where there is limited interaction at the country level but significant interactions for a few firms. Second, small sample, clinical, or experimental studies could provide more evidence on exacdy which deviations from U.S. disclosure practices (quantity, quality, or format) create significant costs for U.S. market participants and on how managers trade off domestic, U.S., and other foreign interactions in choosing disclosure practices. Now that KPS have provided large-sample cross-sectional evidence of these relations, the biggest payoff to future researchers will likely come to those who construct their own disclosure indexes and hand collect proxy data tailored to the specific research questions within powerful contexts.