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http://ssrn.com/abstract=1275924
 
 

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The Effect on Financial Reporting Quality of an Exemption from the SEC Reporting Requirements for Foreign Private Issuers


Giorgio Gotti


University of Texas at El Paso - Department of Accounting

Stacy A. Mastrolia


Bucknell University - School of Management

June 1, 2009

International Journal of Accounting, Forthcoming

Abstract:     
We test for differences in financial reporting quality between companies that are required to file periodically with the SEC and those that are exempted from filing reports with the SEC under Rule 12g3-2(b). We examine three earnings quality measures: conservatism, abnormal accruals, and the predictability of earnings. Our results, for all three measures, show improved financial reporting quality for companies that file with the SEC than for those that are exempt from filing requirements; this difference in financial reporting quality can lead investors to question why the SEC allows the exemption (and is currently discussing expanding the exemption) when one of the primary goals of the SEC is the protection of US investors.

Number of Pages in PDF File: 42

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Date posted: October 1, 2008 ; Last revised: January 2, 2011

Suggested Citation

Gotti, Giorgio and Mastrolia, Stacy A., The Effect on Financial Reporting Quality of an Exemption from the SEC Reporting Requirements for Foreign Private Issuers (June 1, 2009). International Journal of Accounting, Forthcoming. Available at SSRN: http://ssrn.com/abstract=1275924

Contact Information

Giorgio Gotti (Contact Author)
University of Texas at El Paso - Department of Accounting ( email )
500 West University Avenue
El Paso, TX 79968-0542
United States
Stacy A. Mastrolia
Bucknell University - School of Management ( email )
Lewisburg, PA 17837
United States
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