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Prior to the issuance of Financial Accounting Standards Board Statement No. 8 (SFAS No. 8), there was a marked inconsistency in the area of accounting for foreign currency translation. Though designed to make the diverse accounting practices of multinational corporations (MNCs) more compatible, SFAS No. 8 was the subject of a great deal of criticism, eventually leading to the issuance of Financial Accounting Standards Board Statement No. 52 (SFAS No. 52). SFAS No. 52 differs from SFAS No. 8 on objectives and method of translation, and on accounting treatments of translation adjustments. This dissertation provides an empirical examination of the security market reaction to the accounting policy change embodied in SFAS No. 52, and its impact on the volatility of reported earnings of MNCs. The effects of the issuance and early adoption of SFAS No. 52 on security return distributions were determined by both cross-sectional comparisons of cumulative average residuals (CAR) between MNCs and domestic firms and between early and late adopters, and by time-series tests on CAR of MNCs. Two volume analyses were performed to test the effects of SFAS No. 52 on security volume. The first analysis was adjusted to remove the effects of the marketwide factors on volume, and the second analysis was unadjusted for the market influences. Four nonparametric tests were used in testing the effects of SFAS No. 52 vis-a-vis SFAS No. 8 on the volatility of reported earnings of MNCs. The findings of this study led to the following conclusions: (1) SFAS No. 52 had significantly affected security returns of MNCs, but had no significant effects on security volume of MNCs; (2) the early adoption of SFAS No. 52 had no effects on security returns and volume of early adopters as opposed to late adopters; and (3) SFAS No. 52 did not have any significant effects on the volatility of reported earnings of MNCs. However, the impact of exchange adjustments on MNCs* earnings under SFAS No. 52 was significantly affected by the size of foreign operations and industry classifications.