International accounting harmonization and global equity markets

Mary E. Barth*, Greg Clinch, Toshi Shibano

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

95 Citations (Scopus)


We show harmonizing domestic GAAP with foreign GAAP can have deleterious effects on security market performance, specifically price informativeness and trading volume. Harmonization effects result from interaction between two forces. Direct informational effects depend on whether harmonization increases or decreases GAAP precision. Expertise acquisition effects depend on benefits and costs to foreign investors of becoming domestic GAAP experts. These countervailing forces can result in harmonization to more (less) precise GAAP increasing (decreasing) or, unexpectedly, decreasing (increasing) price informativeness and trading volume. We also observe this for a cost of capital metric. Thus, harmonization is not necessarily a desirable singular goal.

Original languageEnglish
Pages (from-to)201-235
Number of pages35
JournalJournal of Accounting and Economics
Issue number1-3
Publication statusPublished - 1 Jan 1999
Externally publishedYes


  • Accounting harmonization
  • International financial markets
  • Financial reporting
  • Securities market performance


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