The Timeliness of Income Recognition by European Companies: An Analysis of Institutional and Market Complexity

This study examines international differences in the asymmetric timeliness of accounting earnings by modelling international exposure to different jurisdictions as a firm‐specific effect, using an index of regulatory complexity that relates to conditions in each of the capital markets in which the f...

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Bibliographic Details
Published in:Journal of business finance & accounting 2004-01, Vol.31 (1-2), p.115-148
Main Authors: Raonic, Ivana, McLeay, Stuart, Asimakopoulos, Ioannis
Format: Article
Language:English
Subjects:
Accounting
Business studies
Capital market
capitalmarkets
Conservatism
enforcement
Equity
Europe
Finance
Income
international accounting
Time
timeliness
U.S.A
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Summary:This study examines international differences in the asymmetric timeliness of accounting earnings by modelling international exposure to different jurisdictions as a firm‐specific effect, using an index of regulatory complexity that relates to conditions in each of the capital markets in which the firm's equity is listed. The companies investigated are those with shares cross‐listed on European stock exchanges, some of which are also listed in New York. Variation across jurisdictions and markets with respect to earnings timeliness and conservatism can be explained in part as an interaction of market effects and regulatory effects, with some evidence of opposition between the two, and the sensitivity of earnings to stock price changes shows a common, converging trend towards greater accounting conservatism in Europe.
ISSN:0306-686X
1468-5957
DOI:10.1111/j.0306-686X.2004.00004.x