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Earnings Management and Cross Listing: Are Reconciled Earnings Comparable to US Earnings?Mark H. LangUniversity of North Carolina at Chapel Hill Jana Smith RaedyUniversity of North Carolina at Chapel Hill Wendy M. WilsonSouthern Methodist University (SMU) - Edwin L. Cox School of Business Journal of Accounting and Economics, Forthcoming Abstract: We compare US firms' earnings with reconciled earnings for cross listed non-US firms. Non-US firms' earnings exhibit more evidence of smoothing, greater tendency to manage towards a target, lower association with share price and less timely recognition of losses. Firms from countries with weaker investor protection show more evidence of earnings management, suggesting that SEC regulation does not supplant the effect of local environment. There is more evidence of earnings management for firms reconciling to US GAAP than for those preparing local accounts in accordance with US GAAP, but both show more evidence of earnings management than US firms.
Keywords: Cross listing, ADR, international accounting, bonding JEL Classification: F30, G15, G38, M41, M43, M47 Accepted Paper SeriesDate posted: April 20, 2006Suggested CitationContact Information
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