NOTE: These notes are prepared solely for the benefit of the students in Acc 611. They are not to be used for any other purpose without the permission of Jagdish S. Gangolly.

• Reasons for explosive growth in international trading activity:
  • Portfolio diversification
  • Corporate control
  • Ease of trading internationally
  • Reduction in national barriers
  • Globalization of competetion leading to strategic alliances through joint ventures
  • Increased sophistication of investors
  • Development of statistical databases (EDGAR, NAARS, COMPUSTAT, CRSP, CIFAR....
• Difficulties in analyzing foreign financials:
  • Data accessibility: Language, frequency, detail.
  • Timeliness of information
  • Differences in filing requirements (Differences in classification, format and extent of disclosures).
  • Language and terminology differences
  • Foreign currency considerations
  • foreign currency translations,
  • foreign exchange transactions,
  • translation adjustments (Danish example on pages 418-19).
  • Differences in accounting principles:
  • primary/secondary statements, reconciliation (Swedish example)
  • Methods for coping--GAAP restatements,

Updated on March 10, 1997 by Jagdish S. Gangolly.