Earnings Management and Cross Listing: Are Reconciled Earnings Comparable to Us Earnings?
Posted: 20 Apr 2006
There are 2 versions of this paper
Earnings Management and Cross Listing: Are Reconciled Earnings Comparable to Us Earnings?
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
Suggested Citation: Suggested Citation
Mark H. Lang (Contact Author)
University of North Carolina at Chapel Hill ( email )
Kenan-Flagler Business School
McColl Building
Chapel Hill, NC 27599-3490
United States
919-962-1644 (Phone)
919-962-4727 (Fax)
Jana Smith Raedy
University of North Carolina at Chapel Hill ( email )
McColl Building
Chapel Hill, NC 27599-3490
United States
919-962-7475 (Phone)
919-962-4727 (Fax)
