Abstract

http://ssrn.com/abstract=912237
 
 

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Cross Listing, Bonding and Firms' Reporting Incentives: A Discussion


Christian Leuz


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Center for Financial Studies (CFS); University of Pennsylvania - Wharton Financial Institutions Center; CESifo Research Network


Journal of Accounting and Economics, Vol. 42, No. 1-2, 2006

Abstract:     
Lang, Raedy and Wilson (JAE 2006) compare the properties of U.S. GAAP accounting numbers across cross-listed and U.S. firms. Using a wide range of properties, LRW show that accounting data are not comparable, even though sample firms use the same accounting standards. I discuss how these findings advance the literature and what they imply for the effectiveness of cross listing as a bonding mechanism. My discussion highlights that documented differences cannot be solely attributed to weak U.S. legal enforcement. I emphasize that accounting standards provide discretion and that cross-listed and U.S. firms are likely to have differential incentives to use this discretion. To illustrate, I document that cross-listed and U.S. firms differ in ownership concentration and that these differences are associated with the level of earnings management. I also provide evidence that home-country institutions continue to influence cross-listed firms' reporting behavior.

Keywords: Cross listing, Earnings quality, Enforcement, Ownership structure, Bonding, US GAAP, Reconciliation

JEL Classification: G15, G32, K22, M41, M43, M44

Accepted Paper Series


Not Available For Download

Date posted: June 30, 2006  

Suggested Citation

Leuz, Christian, Cross Listing, Bonding and Firms' Reporting Incentives: A Discussion. Journal of Accounting and Economics, Vol. 42, No. 1-2, 2006. Available at SSRN: http://ssrn.com/abstract=912237

Contact Information

Christian Leuz (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-834-1996 (Phone)
HOME PAGE: http://chicagobooth.edu/fac/christian.leuz
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
HOME PAGE: http://www.nber.org
European Corporate Governance Institute (ECGI)
Brussels
Belgium
HOME PAGE: http://www.ecgi.org
Center for Financial Studies (CFS) ( email )
Grüneburgplatz 1
Frankfurt am Main, 60323
Germany
University of Pennsylvania - Wharton Financial Institutions Center
3641 Locust Walk
Philadelphia, PA 19104-6218
United States
CESifo Research Network
Poschinger Str. 5
Munich, DE-81679
Germany
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