Document Type
Article
Publication Date
2008
Publication Title
International journal of accounting
Volume
43
Issue
3
First Page
219
Keywords
Information, Political Science, Labour market, Globalization, Law, U.S.A., Multinational enterprises, Legislation
Last Page
245
Abstract
We examine how interactions with foreign capital, product, and labor markets affect the disclosure practices of non-U.S. multinational firms. Drawing on literature related to multinationals, country-level legal institutions, and accounting disclosures, we expect that the relation between globalization and voluntary disclosure will be conditioned by the legal environment in a firm's home country. Specifically, while firms from countries with a strong legal environment (e.g., common-law countries) already face pressure for good disclosure, globalization can increase the benefits associated with good disclosure to firms from weak legal environments (e.g., civil-law countries). We use a self-constructed voluntary disclosure index and hand-collected disclosure and foreign activity data for 643 non-U.S. firms from 30 countries for 2003. We find a significant interaction between globalization and the legal environment. This indicates that for the same level of globalization, there is more voluntary disclosure for firms based in weak legal environments. Our results suggest that globalization is an important variable that has been overlooked in much of the previous cross-country research.
Recommended Citation
Webb, Kimberley A.; Cahan, Steven; and Sun, Jerry. (2008). The Effect of Globalization and Legal Environment on Voluntary Disclosure. International journal of accounting, 43 (3), 219-245.
https://scholar.uwindsor.ca/odettepub/36
Comments
NOTICE: this is the author’s version of a work that was accepted for publication in the International Journal of Accounting. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in, the International Journal of Accounting, 43 (3), 2008 and is available here.