What is it about?
This paper investigates whether financial reporting quality improves or deteriorates after the U.S. Securities and Exchange Commission (SEC) decided to eliminate the Form 20-F reconciliation requirement for foreign cross-listed firms following International Financial Reporting Standards (IFRS). Our results suggest that such revocation improves the financial reporting quality of cross-listed IFRS firms, especially those audited by high-quality auditors and those that originate from countries with strong level environment.
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Why is it important?
We lend direct support to the SEC’s decision to revoke the reconciliation requirement for cross-listed IFRS firms. Our results also highlight the important roles of auditors and the legal environment in shaping financial reporting quality.
Perspectives
This project has important policy implications and provides direct evidence on whether the SEC’s decision to revoke the reconciliation requirement for cross-listed IFRS firms is appropriate. Our results suggest that the reconciliation requirement can lead to errors and management and is not necessary.
Ting-Chiao Huang
Monash University
Read the Original
This page is a summary of: Does the Form 20‐F reconciliation help ensure the financial reporting quality of cross‐listed IFRS firms? A comparison with cross‐listed non‐IFRS firms, International Journal of Auditing, April 2021, Wiley,
DOI: 10.1111/ijau.12228.
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