The presence of foreign private issuers in the North American Compustat Database: A note for empirical research in accounting and finance

This study highlights the importance of attention to the sample collection process when using the North American Compustat database. The study alerts researchers to a significant presence of foreign private issuers in the Compustat database, which is important as most of these firms use non-U.S. accounting standards. Hence, a sample which includes both U.S. and non-U.S. firm results in the use of heterogeneous accounting measurements, and may affect the inferences from accounting and finance research studies. The current study provides an empirical example using earnings and cash flow data from the Compustat database to demonstrate the problem. As predicted, the example indicates that the persistence of operating cash flow and operating accruals differs between U.S. firms and non-U.S. firms. In addition to descriptive statistics and industry membership information for foreign private issuers, the study includes general SEC filing requirements for these firms.