The Effect of SEC Disclosure Regulation Regarding Audit Committees’ Financial Experts on Foreign Private Issuers Cross-Listed on U.S. Securities Exchanges.

• In Event: Effect of IFRS on Debt Markets
  In Paper Session: Economic Consequences of IFRS Adoption II

Abstract

This paper investigates the economic consequences of Securities and Exchange Commission (SEC) disclosure regulation by examining market reactions of non-U.S. cross-listed firms to events related to the SEC’s requirement for a firm to disclose whether its audit committee has at least one financial expert. Using U.S. and home country stock market returns from foreign private issuers (FPI), the findings from this study suggest that foreign companies traded in U.S. capital markets and subject to SEC regulatory requirements experience negative returns around event dates related to this requirement. Their returns in U.S. markets are also more negatively impacted by audit committee financial expert disclosure regulation than are the returns in their home countries. Additionally, this study extends research by Defond et al. (2005) by examining SEC mandatory disclosures of financial experts on company audit committees.

Authors

• Steve Garner, University of North Texas

• Teresa L Conover, University of North Texas

• Paul D. Hutchison, University of North Texas