This study examines whether investors’ familiarity bias affects their earnings-based equity valuation. Building on theoretical and empirical findings from prior studies, we hypothesize that familiarity bias may reduce the earnings-based equity valuation of foreign firms. We also hypothesize that the perceived link between current earnings surprises and future operating cash flows is one channel through which familiarity bias affects earnings-based equity valuation. Using the setting of the earnings announcements of U.S.-listed non-U.S. firms and U.S. firms matched by industry, year, and firm characteristics, we find that U.S. investors discount the earnings response coefficient of non-U.S. firms relative to that of U.S. firms by 46%. Using analysts’ earnings forecast revisions immediately following the earnings announcements as the proxy for the market-perceived link between current earnings surprises and future operating cash flows, we find that analysts significantly discount the link for non-U.S. firms relative to U.S. firms. Both discounts exist only in the subsamples of non-U.S. firms toward which U.S. investors have a higher degree of familiarity bias. Thus, we provide empirical evidence of the effect of the familiarity bias on earnings-based equity valuation and the channel through which it affects equity valuation.

这项研究研究了投资者的熟悉度偏差是否会影响他们基于收益的股票估值。基于先前研究的理论和经验发现，我们假设熟悉度偏差可能会降低外国公司基于收益的股票估值。我们还假设，当前收益意外与未来营业现金流量之间的感知联系是熟悉度偏差会影响基于收益的股票估值的一种渠道。通过使用在美国上市的非美国公司和根据行业，年份和公司特征匹配的美国公司的收益公告设置，我们发现美国投资者相对于美国公司而言，折现非美国公司的收益响应系数为46％。通过在盈余公告后立即对分析师的盈余预测进行修订，以作为当前盈余与未来营业现金流量之间市场感知联系的替代指标，我们发现分析师相对于美国企业而言，大大降低了非美国企业与美国企业之间的联系。这两种折扣仅存在于非美国公司的子样本中，而美国投资者对子样本的熟悉程度更高。因此，我们提供了基于经验的偏见对基于收益的股权估值的影响及其影响股权估值的渠道的经验证据。美国投资者对它们的熟悉程度较高的公司。因此，我们提供了基于经验的偏见对基于收益的股权估值的影响及其影响股权估值的渠道的经验证据。美国投资者对它们的熟悉程度较高的公司。因此，我们提供了基于经验的偏见对基于收益的股权估值的影响及其影响股权估值的渠道的经验证据。