This study evaluates whether hypotheses of US management's earnings forecast decisions can explain similar decisions in Taiwan. It considers the applicability of positive accounting theories across national boundaries. A match-pair design is used to test the explanatory power of the hypotheses, on two forecast-release samples, one US and one Taiwanese. Both a univariate test and a multivariate test indicate that the hypotheses are more descriptive of management's behavior in the United States than in Taiwan. This leads to the conclusion that positive accounting theories have limited validity internationally because they are heavily dependent on the background institutions.
International Journal of Accounting, 26(4), 264-276