Transnational Equity Analysis (The Wiley Finance Series)

Transnational Equity Analysis......Page 4
Contents......Page 10
Acknowledgements......Page 16
1.1 Aims and scope of the book......Page 18
1.2 Outline of the book......Page 21
1.3 References......Page 22
2.1 Introduction......Page 24
2.2 The growth in trade of foreign securities......Page 25
2.3.1 Capital demand-side factors......Page 27
2.3.2 Capital supply-side factors......Page 30
2.4.1 The importance of institutional investment......Page 33
2.4.2 The role of fund managers and investment analysts......Page 35
2.5 Summary......Page 36
2.6 References......Page 37
3.2 Causes of international accounting differences......Page 40
3.2.1 Business ownership and financing......Page 41
3.2.2 Legal systems......Page 42
3.2.4 The accounting profession......Page 43
3.2.5 Consolidation of determinants of international accounting differences......Page 44
3.2.6 The classification of accounting systems......Page 45
3.3 The effects of international accounting diversity on reported figures......Page 47
3.3.1 Example of US/German GAAP differences: BASF......Page 49
3.4 The effects of international accounting differences on stock markets......Page 52
3.5 The international harmonisation of accounting......Page 53
3.5.1 The rationale for international accounting harmonisation......Page 56
3.5.2 Analysts’ and investors’ participation in international accounting standard setting......Page 57
3.6 Summary......Page 58
3.7 References......Page 59
4.2 The theory of equity valuation......Page 62
4.3.1 Fundamental analysis......Page 64
4.3.2 Technical analysis......Page 67
4.3.3 Beta analysis......Page 68
4.3.4 Economic Value Added......Page 70
4.3.5 Top-down analysis......Page 71
4.4 The Efficient Markets Hypothesis and equity analysis techniques......Page 72
4.5 Existing empirical evidence on transnational equity analysis......Page 74
4.7 References......Page 75
5.2.1 The theoretical case for the relevance of accounting information......Page 80
5.2.2 Empirical evidence on the use of accounting information in domestic equity analysis......Page 82
5.2.3 Annual reports and the Efficient Markets Hypothesis......Page 83
5.3 Direct company contact as an information source......Page 85
5.4 International evidence on information sources used in domestic equity analysis......Page 86
5.5.1 Survey-based research......Page 88
5.5.2 Market-based evidence on transnational equity analysis......Page 90
5.6 Summary......Page 93
5.7 References......Page 94
6.2.1 The questionnaire survey......Page 98
6.2.2 Semi-structured interviews......Page 102
6.3.1 Questionnaire data......Page 104
6.4 Summary......Page 106
6.5 References......Page 107
7.2.1 Sample composition......Page 108
7.2.2 Number of companies analysed......Page 109
7.2.3 Countries analysed......Page 111
7.2.4 Analyst and fund manager specialisation......Page 113
7.3.1 Overall usefulness of analysis techniques......Page 117
7.4 Comparison of domestic and transnational analysis techniques......Page 119
7.4.1 International variation in transnational analysis techniques......Page 121
7.5 Differences between transnational analysts and fund managers......Page 123
7.6 Transnational analysis techniques: a focus on fundamental analysis......Page 124
7.7 Discussion and conclusions......Page 127
7.8 References......Page 128
8.2.1 Domestic equity analysis......Page 130
8.2.2 Transnational equity analysis......Page 132
8.2.3 International variation in transnational information sources......Page 135
8.3 Differences between transnational analysts and fund managers......Page 137
8.4.2 Versions of the annual report used in foreign company analysis......Page 139
8.4.3 The usefulness of components of annual reports......Page 143
8.4.4 Usefulness of components of transnational annual reports: differences between analysts and fund managers......Page 147
8.5 Company contacts: uses and limitations......Page 148
8.6 The role of local analysts......Page 150
8.6.1 Information asymmetries as a cause of reliance on local analysts......Page 154
8.6.2 Regional variation......Page 156
8.7 Discussion and conclusions......Page 157
8.8 References......Page 160
9.2 The effects of international accounting differences on investment decisions......Page 162
9.2.1 Differences between analysts and fund managers......Page 164
9.2.2 International variation in the effects of international accounting differences......Page 165
9.2.3 Accounting standards and the cost of capital......Page 166
9.3 Views on the international harmonisation of accounting......Page 168
9.3.1 Differences between analysts and fund managers......Page 171
9.3.2 Reasons for support for harmonisation......Page 172
9.4 Discussion and conclusions......Page 173
9.5 References......Page 174
10.1 Motivation for the book......Page 176
10.2.1 Equity analysis techniques......Page 177
10.2.2 Transnational information sources......Page 178
10.2.3 Harmonisation and international accounting differences......Page 181
10.2.4 Limitations of the empirical study......Page 183
10.3 Concluding remarks......Page 184
10.4 References......Page 185
Details of interview respondents......Page 188
Index......Page 192