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Does accounting comparability alleviate the informational disadvantage of foreign investors?11We thank the editor, Professor Carl R. Chen, and two reviewers for their comments that greatly improved the manuscript

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  • Chauhan, Yogesh
  • Kumar, Surya B.

Abstract

The paper examines the benefits of financial accounting comparability for an emerging market. We document the benefits in the form of foreign equity investments. Our empirical results find that foreign investors prefer to invest in firms showing more accounting comparability. Our results also reveal that the benefits of accounting comparability are more prominent when firms have less visibility, operate in a less competitive industry, and have stock prices that reflect a lower level of firm-specific information. We further find that the effect of accounting comparability is lower for domestic mutual fund ownership. Overall, our study suggests that accounting comparability can complement a poor information environment concerning emerging market firms.

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  • Chauhan, Yogesh & Kumar, Surya B., 2019. "Does accounting comparability alleviate the informational disadvantage of foreign investors?11We thank the editor, Professor Carl R. Chen, and two reviewers for their comments that greatly improved th," International Review of Economics & Finance, Elsevier, vol. 60(C), pages 114-129.
    • Handle: RePEc:eee:reveco:v:60:y:2019:i:c:p:114-129
    DOI: 10.1016/j.iref.2018.12.018
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    More about this item

    Keywords

    Foreign investments; Financial accounting comparability; Emerging market; Mutual funds; India;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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