Earnings Management and Cross Listing: Are Reconciled Earnings Comparable to Us Earnings?

Posted: 20 Apr 2006

See all articles by Mark H. Lang

Mark H. Lang

University of North Carolina at Chapel Hill

Jana Smith Raedy

University of North Carolina at Chapel Hill

Wendy M. Wilson

Texas Christian University - Department of Accounting; Southern Methodist University (SMU) - Accounting Department

Multiple version iconThere are 2 versions of this paper

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

Lang, Mark H. and Smith Raedy, Jana and Wilson, Wendy M., Earnings Management and Cross Listing: Are Reconciled Earnings Comparable to Us Earnings?. Journal of Accounting and Economics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=897260

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)

Wendy M. Wilson

Texas Christian University - Department of Accounting ( email )

M.J. Neeley School of Business
TCU Box 298530
Fort Worth, TX 76129
United States

Southern Methodist University (SMU) - Accounting Department ( email )

United States

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