The timeliness of accounting disclosures in international security markets

Value Creation in M&A Transactions, Conference Calls, and Shareholder Protection

“…Furthermore, acquirers in the healthcare sector appear to be keener to conference calls consistent with Botosan (1997), and firms from Germany or Switzerland are more likely to conduct conference calls than UK firms as the coefficients are significantly positive for these two countries. In view of the national patterns of disclosure, the results are unexpected as common-law countries, represented by the UK in this study, are evidenced to provide a higher level of disclosure (Ball et al 2000;Conover et al 2008). Given the lower takeover market activity (La Porta et al 1998;Santema et al 2005) and an intrinsically higher degree of information asymmetry of code-law countries (La Porta et al 1998), the result appears less surprising based on the assumption that the investors' demand for disclosure may be particularly high around such strategic moves when the level of informedness is generally lower in these markets.…”

“…Open conference calls are rather conducted by firms facing greater information asymmetry, typically in high-tech industries with lower analyst following, lower institutional ownership, dispersed investor base, and greater revenue volatility. Although disclosure policy is often regarded as an "exclusively firm-specific phenomenon" (Archambault and Archambault 2003, p. 174), a growing body of international research documents national patterns of disclosure which is determined by legal and institutional factors (Ball et al 2000;Conover et al 2008) and cultural background (Gray 1988;Hope 2003), and remain persistent despite regulatory convergences such as the International Financial Reporting Standards (IFRS) (Kvaal and Nobes 2010).…”

“…In contrast, code-law countries are typically associated with higher stakeholder-orientation, weaker legal investor protection, higher ownership concentration and lower takeover market activity with the exception of France being the second largest market after the UK in Europe. Exemplary evidences of shareholder-oriented disclosure practices in common-law countries are documented by Ball et al (2000) for selected groups of common-law countries (Australia, Canada, UK, US) and code-law countries (France, Germany, Japan), and by Conover et al (2008) for a larger sample of 22 countries across the world including the US, the UK, Germany, Switzerland, France and Spain, in order of descending disclosure quality.…”

“…Beginning with the differentiation of common-law and code-law countries, common-law countries-typically represented by the UK or the US-are characterized by higher investor protection, rigorous enforcement of these corporate laws, more liquid stock market, dispersed ownership structure, and higher requirement of disclosure (La Porta et al 1998;Ball et al 2000;Bailey et al 2006;Conover et al 2008). Consequently, the larger stock market response in the UK may be attributed to the higher liquidity of its stock market and investors' overall confidence in firms complying with higher standard of disclosure and exercising shareholder-oriented disclosure practices in routine.…”

“…France code-law countries are typically characterized by poorer legal protection, low public enforcement and block building of large shareholders according to La Porta et al (1998). French companies evidently exercise less timely disclosure and provide a lower amount of strategic information (Santema et al 2005;Conover et al 2008). Furthermore, France displays a higher level of uncertainty according to Hofstede (2001, p. 500), which should further information asymmetry following the argument of Gray (1988) that societies with highly uncertainty avoiding cultures tend to be more secretive.…”