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This paper aims to apply the Capital Market Liability of Foreignness (CMLOF) framework to the audit fees of a sample of foreign firms listed on US exchanges to examine whether American auditors price foreignness.

The four components of the CMLOF are institutional distance (civil versus common law system and enforcement), information asymmetry (disclosures and mandatory IFRS adoption), unfamiliarity (exports, English language and geographical distance) and cultural difference [Hofstede (1980) dimensions of culture]. These variables are examined in a regression model that explains audit fees to determine the auditor perception of risk associated with the CMLOF.

Examining the factors that mitigate perceived agency costs, this investigation determines that auditors price risk according to each component of the liability of foreignness. Audit fees are higher for shareholders of firms headquartered in countries exhibiting greater institutional distance, unfamiliarity and cultural distance. Audit fees are higher for firms when their home country requires additional disclosures or the adoption of IFRS to reduce information asymmetry.

CMLOF is costly for capital market participants and has implications for auditors, shareholders of foreign firms and managers considering listing in the US Auditors, and investors should carefully assess this risk for pricing and valuation, and managers should take action, to the extent possible, to reduce the firm-specific level of unfamiliarity and increase transparency.

This paper is the first to apply the CMLOF to examine whether auditors price aspects of foreignness of their non-US-headquartered clients.

The purpose of this paper is to determine the initial stock price reaction and long‐run returns for joint venture announcements between US MNCs and foreign governments as well as the firm characteristics and political risk factors of the foreign governments that affect the abnormal returns. In addition we determine changes in total and systematic risk following the joint venture.

Announcement abnormal returns are calculated using event study cumulative abnormal returns. Long‐run returns use a buy and hold methodology. Cross section regressions are performed on both the announcement and long run returns.

Announcement abnormal returns are a positive 0.37 percent; however, the long‐run returns are a significant −3.99 percent the end of the first year. Both short‐run and long‐run returns are higher when the level of internal conflict is low, and surprisingly when the level of corruption is high. Also, surprisingly, short‐run returns are higher when ethnic violence is higher, but, as expected, long‐run returns are higher when there is higher democratic stability.

One implication is that when US managers are confronted by foreign government corruption, there may be a conflict between the success of the project and the ethical/legal requirements of the company.

The paper focuses on joint ventures with foreign governments rather than the usual foreign companies. Also, unlike previous papers that have used only one measure of political risk, this paper uses five of the PRS categories of political risk.

To determine what characteristics distinguish firms that conduct international business within three years of going public and six years from founding, and how these firms perform.

A logistic regression analysis is used to identify characteristics that distinguish firms that are international at the time they go public, versus those that are not. The paper also assesses post‐IPO performance and apply multivariate analysis to determine how performance varies among these firms.

Compared to firms of similar age who do not pursue rapid internationalization, born‐global firms are generally larger, more diversified, and have more venture capital backing. Their founders, board members and managers exhibit more international experience. The returns 12 and 18 months post‐IPO are significantly higher for born‐global firms than for a control sample of firms who do not engage in rapid internationalization. Furthermore, those born‐global firms with joint ventures or acquisitions in several countries perform better than those that only export within the first six years since their inception.

Managerial implications include having a board of directors with sound international business experience as well as using a venture capital firm to provide monitoring and oversight of operations at home and in the foreign market.

This paper is original in that it is the first to provide a financial markets‐oriented empirical investigation of the “born‐global” phenomenon using a sample of newly public American firms.

Bank profit warnings represent a milder form of negative news than a bank failure. Yet, they may contain signals about a bank or its rivals because the information is transmitted when the bank believes that the market is overly optimistic about its future earnings. Thus, the profit warning serves as a means by which insiders of the bank can reduce the asymmetric information between the bank’s insiders and its investors. We find that banks experience negative valuation effects in response to their profit warnings. The banks’ profit warnings result in significant negative valuation effects for its corresponding rival banks, which implies that the warning carries valuable information about banking industry conditions. However, the effects on rivals are attenuated since the passage of Regulation Fair Disclosure (RFD). This implies that investors may be relying on more transparent sources of information about individual banks rather than relying on one bank’s warning as a signal about other banks. Furthermore, bank regulations may allow for more transparent communication by banks than that of nonbank firms.

Literacy has been one of the most publicized societal problems of the past decade, and it is likely to continue as such for some time to come. Like many problems of modern society, it involves a variety of educational, social, and economic factors, and will therefore not be easily solved.