Prior research concludes that firms competing for foreign resources tend to expand their financial and
accounting disclosure. This expanded disclosure is assumed to reduce resource providers' uncertainty about
transactions with the firm and, in turn enable the firm to obtain resources at lower cost. Improved information
reduces uncertainty about a company and therefore, potentially the risk premium required by investors (Zarzeski,
1996). Choi and Levich (1991) argued that diversity in accounting reporting (measurement, presentation, and
disclosure) affects capital market participants. In an extensive survey of capital market regulators and rating
agencies, almost one-half of the respondents stated that their capital market decisions were affected by
accounting diversity. In the absence of common accounting principles and disclosure practices, analyzing foreign
financial statements is difficult for investors. International Financial Reporting Standards, though, create a
common language for defining, interpreting and publication of financial statements in the whole world (Blanc,
2003).