Non-United States firms' accounting standard choices in accessing foreign capital markets

This dissertation investigates why non-US firms disclose financial information prepared in accordance with an internationally acceptable set of accounting standards rather than or in addition to financial information prepared in accordance with the accounting standards of their countries of domicile. Specifically, I identify costs and benefits of preparing annual financial reports that comply with International Accounting Standards (IAS) or US accounting standards (US-GAAP). I also explore whether a firm's disclosure strategy of preparing internationalized financial reports impacts the behavior of financial analysts and market-makers who trade the firm's securities.;I examine the 1993 financial reports of 211 non-US firms listed in the SEAQ International Equity Market to determine the accounting standards the firms follow and, as a consequence, whether they disclose internationalized financial information. SEAQ International provides a unique setting to assess firms' accounting standard choices because it allows firms flexibility in their financial reporting standards.;The results are consistent with the hypotheses that firms will comply with IAS or US-GAAP (1) to facilitate communication with shareholders in foreign markets, (2) to supply more information than what is required according to the generally accepted accounting principles of their country of domicile, (3) to provide more standardized financial information, and (4) when they are relatively large firms. In addition, I find IAS firms are more likely to raise capital in future equity offerings than firms disclosing domestic-GAAP or US-GAAP financial information. This suggests firms incorporate IAS into their disclosure strategies prior to engaging in stock offerings. Finally, I find that firms are more likely to disclose US-GAAP rather than IAS financial information when they must file US-GAAP financial data with the SEC.;Regarding the impact of accounting standard choice on sophisticated users of financial information, I find that after firms adopt IAS, they are followed by significantly more financial analysts than domestic-GAAP firms. In addition, analyst forecast accuracy improves significantly after firms adopt IAS. These results provide limited evidence that disclosing internationalized financial information can impact the behavior of financial analysts and ultimately lower firms' costs of capital.