Hasan, Siraj, Tarazi, and Wu (2021) examine the association between country-level expropriation risk and the pricing of foreign earnings in multinational corporations (MNCs). They contend and find that, when subsidiary country expropriation risk declines, the value relevance of foreign earnings increases. Hasan et al. (2021) view their evidence as consistent with the idea that investors discount foreign earnings when they perceive the risk of expropriation and unfair treatment by foreign governments to be high.
The study of Hasan et al. (2021) aims to contribute to the longstanding stream of the literature that examines the pricing and value relevance of foreign earnings (e.g., Thomas 1999; Callen, Hope, and Segal 2005; Hope, Kang, Thomas, and Vasvari 2009), as well as to the nascent literature that investigates the within-MNC determinants of financial reporting transparency (e.g., Dyreng, Hanlon, and Maydew 2012; Beuselinck, Cascino, Deloof, and Vanstraelen 2019).
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