Uncertainty avoidance and stock price informativeness of future earnings

We explore whether uncertainty avoidance, an important aspect of national culture, influences the level informativeness share prices about future earnings. Uncertainty avoidance relates to extent which members a society feel threatened by uncertain or unknown situations. employ data from 20 countries, comprising 26,882 firm-year observations reporting under same accounting standards. Using panel analysis with OLS regressions, we show that firms’ current stock returns incorporate less earnings information in countries high avoidance. Further, report this relation is pronounced within relatively market openness, consistent premise effect culture reduced when country’s more open foreign investors. Our study contributes literature showing international investors’ innate differences affect their ability anticipate and impound into prices. As such, benefits adopting common set standards are uneven across not only because way applied but also due differences.