The Market Valuation of IAS Versus U.S. Gaap Accounting Measures Using Form 20-F Reconciliations
Posted: 6 Apr 1998
Date Written: March 1998
We investigate the market valuation of earnings and book value amounts prepared under International Accounting Standards (IAS) and U.S.-GAAP to provide evidence on the debate between the U.S. SEC and the NYSE on whether foreign firms should be allowed to list in the U.S. using IAS. Our sample consists of foreign firms that adopted IAS in their primary accounts with a reconciliation to U.S.-GAAP in their Form 20-F filing. Using both price and return valuation models, we find evidence that the U.S.-GAAP earnings reconciliation adjustment is associated with market value and stock returns after controlling for IAS amounts. In addition, we find evidence that U.S.-GAAP amounts are valued differently than IAS amounts and are more highly associated with market values and security returns than IAS amounts.
JEL Classification: M41, M45, G15
Suggested Citation: Suggested Citation