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To link to full-text access for this article, visit this link: http://dx.doi.org/10.1016/j.jacceco.2006.09.001 Byline: Mark DeFond (a), Mingyi Hung (a)(b), Robert Trezevant (a) Keywords: Cross-country event study; Earnings announcement; Price reaction Abstract: We draw on the investor protection literature to identify structural factors in the financial reporting environment that are likely to explain cross-country differences in the information content of annual earnings announcements. Using data from over 50,000 annual earnings announcements in 26 countries, we find that annual earnings announcements are more informative in countries with higher quality earnings or better enforced insider trading laws, and that annual earnings announcements are less informative in countries with more frequent interim financial reporting. We also find that, on average, earnings announcements are more informative in countries with strong investor protection institutions. Author Affiliation: (a) Leventhal School of Accounting, University of Southern California, Los Angeles, CA 90089-0441, USA (b) School of Accountancy, Chinese University of Hong Kong, Shatin, N.T., Hong Kong Article Note: (footnote) [star] The authors wish to thank S.P. Kothari (the editor), Per Olsson, Danqing Young, and the referee for helpful suggestions, as well as seminar participants at the University of California at Los Angeles, the University of Southern California, the University of Tennessee, the AAA FARS Mid-Year Meeting, and the International Conference on Corporate Governance in China and Asia. We also gratefully acknowledge the contribution of I/B/E/S International Inc. for providing earnings forecast data from their Institutional Brokers Estimate System. The data have been provided as part of a broad academic program to encourage earnings expectations research. All errors are ours.

Research is presented describing the study of shareholder protection and the positive influence on financial statements compared with countries with weak protection.