Explaining the Accounting Disclosure Index of Stock Exchanges by Foreign Exchange Market Activity

In this article, researcher-created accounting disclosure index of 23 stock exchanges for the year 1992 and its relationship with variables including foreign exchange turnover, economic and financial indicators are investigated. The accounting disclosure index of global stock exchanges crafted by Adhikari and Tondkar (1992) is regressed on foreign market turnover which is utilized as a proxy for foreign exchange market activity. The OLS results support that along with the activity of foreign exchange market; GNI per capita, market capitalization, energy and electric consumption, number of listed companies are significantly related with the accounting disclosure index. The foreign market turnover is found to be positively influencing the accounting disclosure index. The model explains the 73% of the variation in the index with an F-ratio of 26.56 indicating the overall significance of the model