Further Evidence on International Accounting Differences and Their Relationship to Share Prices
Ronald A. Stunda

Abstract
Past studies find differences in the demand for accounting earnings releases, a timeliness issue, that may be specific to Code-law countries (i.e., Germany, France, Japan, China) versus Common-law countries (i.e., US, UK, Canada). This difference may be attributed to structural information asymmetry in these countries. For example, in Code-law countries, stakeholder governance rests in a few hands (i.e., the government or lending institutions). In Common-law countries the stakeholder governance is more diverse and dispersed. In addition, prior studies also show that accounting earnings disclosures in foreign countries (when grouped in regions) have a different correlation to security returns than domestic earnings disclosures and returns, a value-relevance issue. This study extends extant literature by using a more contemporaneous study period (2001-2012) and focusing on countries that have created the most economic growth during this period, namely; the US, UK (Common-law countries), and Germany, Japan, and China (Code-law countries). In addition, this study also incorporates findings regarding the above issues by eight major industries and across nations, something not attempted heretofore. Study findings suggest that regardless of the country, each nation studied contains a relatively high degree of demand for earnings timeliness. In addition, when assessing the timeliness issue by industry, each industry displays a high degree of earnings timeliness with the Healthcare and Utilities industries at the lower end. With respect to the value of earnings disclosure relative to security returns, findings suggest no significant difference across the nations studied. With respect to industry analysis, each industry values the relevance of earnings disclosures, at differing significance levels.

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