Does accounting choice influence U.S. investment in non-U.S. companies?

evidence from U.S. institutional investment in Australian firms

Shrutika Chugh, Neil Fargher

Research output: Contribution to conferencePaper

Abstract

The adoption of International Accounting Standards is predicated upon the assumption that this will lower the cost of analysis for international investors by standardizing accounting policies. It is posited 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. The results suggest that large U.S. institutional holdings in Australian companies are associated with ADR listing and, incrementally, companies’ choice of accounting methods that conform to U.S. GAAP. While making accounting choices in compliance with U.S. 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 economic significance of these differences is relatively minor.
Original languageEnglish
Number of pages46
Publication statusPublished - 2006
EventAccounting Association of Australia and New Zealand Conference (2006) - Wellington, New Zealand
Duration: 2 Jul 20064 Jul 2006

Conference

ConferenceAccounting Association of Australia and New Zealand Conference (2006)
CityWellington, New Zealand
Period2/07/064/07/06

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    Chugh, S., & Fargher, N. (2006). Does accounting choice influence U.S. investment in non-U.S. companies? evidence from U.S. institutional investment in Australian firms. Paper presented at Accounting Association of Australia and New Zealand Conference (2006), Wellington, New Zealand, .