Trading Volume Reaction to the Earnings Reconciliation from IAS to U.S. GAAP on Form 20-F

Chen, Lucy Huajing; Sami, Heibatollah

doi:10.2139/ssrn.542922

Cited by 9 publications

(42 citation statements)

References 1 publication

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“…Based on a sample of 195 firms cross-listed in the US and reporting under IFRS, they continue to find a positive association between the magnitude of reconciliation adjustments and abnormal volume in the two days surrounding the Form 20-F filing date, consistent with prior results of Chen and Sami (2008).…”

Section: Evidence From Mandatory Adoptionsupporting

confidence: 75%

“…In a related study, Chen and Sami (2008) examine short-term trading volume reactions to information contained in Form 20-F reconciliations of IAS to US GAAP. Based on a sample of 48 non-US firms cross-listed in the US and reporting under IAS, they find that the magnitude of reconciliation adjustments is significantly positively associated with abnormal volume in the two days around the Form 20-F filing date in both the local and US markets.…”

Section: Evidence From Voluntary Ifrs Adoptionmentioning

confidence: 99%

See 1 more Smart Citation

A Review of the IFRS-Adoption Literature

George

Shivakumar

2015

SSRN Journal

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Section: Evidence From Mandatory Adoptionsupporting

confidence: 75%

Section: Evidence From Voluntary Ifrs Adoptionmentioning

confidence: 99%

A Review of the IFRS-Adoption Literature

George

Shivakumar

2015

SSRN Journal

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“…Chen and Sami point out that investigating the trading volume reaction provides an important complement because trading‐volume‐based measures are more powerful indicators of information content, especially in contexts such as these reconciliations that are based on small samples (Cready and Mynatt 1991; Cready and Hurtt 2002). Chen and Sami (2008) find that the difference between IAS and U.S. GAAP earnings is positively associated with abnormal trading at the reconciliation announcement date, suggesting that investors find the reconciliations informative.…”

Section: Empirical Evidence On Trading Volume Around Financial Dismentioning

confidence: 88%

“…Bamber, Barron, and Stober (1997: 585) argue that information revealed in nonannouncement periods induces bursts of trading that have more effect on the mean than the median level of nonannouncement trading, suggesting that mean adjustments yield less powerful indicators of information‐based trading compared to median adjustments. Thus, most estimates of expected trading based on firm‐specific average trading in nonannouncement periods measure expected volume as the median (not the mean) nonannouncement level of trading (e.g., Kross, Ha, and Heflin 1994; Bamber et al 1997; Ahmed and Schneible 2007; Chen and Sami 2008).…”

Section: Empirical Research Methods and Measuresmentioning

confidence: 99%

“…Chen and Sami (2008) study market reactions to Form 20‐F reconciliations between International Accounting Standards (IAS) and U.S. generally accepted accounting principles (GAAP) earnings. Prior research on the information content of reconciliations based on price reactions yields mixed evidence.…”

Section: Empirical Evidence On Trading Volume Around Financial Dismentioning

confidence: 99%

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Trading Volume Around Earnings Announcements and Other Financial Reports: Theory, Research Design, Empirical Evidence, and Directions for Future Research*

Bamber¹,

Barron

Stevens

2011

Contemporary Accting Res

224

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Information content of IFRS versus GAAP financial statements

Ricketts

Riley

Shortridge

2018

JFRA

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Purpose This study aims to determine whether financial statement users suffered a significant loss of information when, in November 2007, the SEC dropped the requirement for foreign private issuers using International Financial Reporting Standards (“IFRS firms”) to reconcile their financial statements to US generally accepted accounting principles (GAAP). Design/methodology/approach The study investigates whether analyst forecast errors and forecast dispersion increased for IFRS firms to a greater extent than for US GAAP firms after the Securities and Exchange Commission (SEC) dropped the reconciliation requirement. Using a treatment group comprised of IFRS firms and a matched sample of US GAAP firms, this study uses regression analyses to compare forecast errors and dispersion for the last fiscal year the reconciliation was available and the first fiscal year during which the reconciliation was unavailable to analysts. Findings The study finds evidence that forecast errors for IFRS firms exhibited no systematic change after the reconciliation was no longer available for analysts covering those firms. Thus, it does not appear that dropping the reconciliation requirement was associated with a change in forecast accuracy. However, the study does find evidence of increased dispersion in the IFRS firms’ forecasts relative to their US GAAP counterparts after the reconciliation requirement was dropped. Practical implications These findings have implications for evaluating the Securities and Exchange Commission’s 2007 decision to eliminate the reconciliation for IFRS firms. Specifically, the Securities and Exchange Commission’s decision does not appear to have significantly altered analysts’ information environments. Originality/value This paper contributes to the understanding of how a group of sophisticated financial statement users adapt to different sets of accounting standards.

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Trading Volume Reaction to the Earnings Reconciliation from IAS to U.S. GAAP on Form 20-F

Cited by 9 publications

References 1 publication

A Review of the IFRS-Adoption Literature

A Review of the IFRS-Adoption Literature

Trading Volume Around Earnings Announcements and Other Financial Reports: Theory, Research Design, Empirical Evidence, and Directions for Future Research*

Information content of IFRS versus GAAP financial statements

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