Relevance of U.S.-Gaap for Japanese Companies

Abstract

We use differences in U.S. GAAP and Japanese-GAAP accounting measures to evaluate the value-relevance of U.S.-GAAP reports. We show data provided in U.S. GAAP financial statements of Japanese firms is value-relevant beyond that contained in domestic-GAAP statements. Our results complement extant research and support the proposition that U.S. reporting methods provide value-relevant data. Understanding the value-relevance of data from Japanese firms is important in its own right because of the major role these firms play in international markets. We also provide evidence on significant transnational firms that voluntarily provide U.S. GAAP statements.

Keywords: Book value equity, earnings, foreign registrants, U.S.-GAAP, value-relevance

JEL Classification: F23, G15, M40, M41