The Effect on Financial Reporting Quality of an Exemption from the SEC Reporting Requirements for Foreign Private Issuers

Gotti, Giorgio; Mastrolia, Stacy A.

doi:10.1016/j.intacc.2011.12.002

Cited by 12 publications

(6 citation statements)

References 20 publications

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“…Their findings suggest that widespread application of IFRS by non-U.S. firms has enhanced financial reporting comparability with U.S. firms, but differences remain for some firms. Gotti and Mastrolia (2012) test for differences in financial reporting quality between foreign companies that are required to file with the SEC and those that are exempted from filing reports with the SEC under Rule 12g3-2(b). They examine three earnings quality measures: conservatism, abnormal accruals, and the predictability of earnings.…”

Section: Domestic Standards Versus Iasmentioning

confidence: 99%

Are International Financial Reporting Standards–Based and U.S. GAAP–Based Accounting Amounts Comparable? Evidence From U.S. ADRs

Eng

Sun

Vichitsarawong

2014

Journal of Accounting, Auditing & Finance

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This article examines whether accounting amounts reported under International Financial Reporting Standards (IFRS) by firms cross-listed in the United States (American Depositary Receipts [ADRs]) are comparable with those reported under U.S. Generally Accepted Accounting Principles (GAAP). We compare the two samples on the basis of explanatory power of price, return, and cash flow models, timeliness in reporting, accrual quality, and predictive power of accounting. Value relevance, timeliness, and accrual quality of accounting numbers under U.S. GAAP are not significantly different than those under IFRS. The two systems are comparable in predictive power after 2007. Overall, the evidence does not indicate significant differences in accounting quality between reporting under U.S. GAAP and IFRS. Our findings provide evidence to support the policy of the U.S. Securities and Exchange Commission (SEC) in allowing foreign firms listing in the United States to use IFRS for their financial reports without reconciliation to U.S. GAAP.

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Section: Domestic Standards Versus Iasmentioning

confidence: 99%

Are International Financial Reporting Standards–Based and U.S. GAAP–Based Accounting Amounts Comparable? Evidence From U.S. ADRs

Eng

Sun

Vichitsarawong

2014

Journal of Accounting, Auditing & Finance

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“…The previous studies on earnings management were largely conducted based on data in the USA and Europe (Ferreira and Vilela, 2004;Matoussi and Jardak, 2012;Alali and Foote, 2012;Gotti and Mastrolia, 2012). Chung et al (2005) examine and find that low-growth companies with high free cash flow use income-increasing decretionary accruals to offset the low or negative earnings.…”

Section: Introductionmentioning

confidence: 99%

The impact of surplus free cash flow and audit quality on earnings management

Rusmin

Astami

Hartadi

2014

Asian Review of Accounting

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If you would like to write for this, or any other Emerald publication, then please use our Emerald for Authors service information about how to choose which publication to write for and submission guidelines are available for all. Please visit www.emeraldinsight.com/authors for more information. About Emerald www.emeraldinsight.comEmerald is a global publisher linking research and practice to the benefit of society. The company manages a portfolio of more than 290 journals and over 2,350 books and book series volumes, as well as providing an extensive range of online products and additional customer resources and services.Emerald is both COUNTER 4 and TRANSFER compliant. The organization is a partner of the Committee on Publication Ethics (COPE) and also works with Portico and the LOCKSS initiative for digital archive preservation. AbstractPurpose -The purpose of this paper is twofold. First, it investigates whether high free-cash-flow companies with low-growth opportunities (surplus free cash flow (SFCF)) are associated with income-increasing earnings management. Second, it scrutinizes the effect of audit quality on the income-increasing earnings management and SFCF and earnings management relationship. Design/methodology/approach -This study focusses on companies listed on the Bursa Efek Indonesia, Bursa Malaysia, and Stock Exchange of Singapore over the period 2005-2010. The cross-sectional modified Jones (1991) model is used to measure discretionary accruals (DACs) (the proxy for earnings management). SFCF is an indicator variable with firm j scored 1 if their retained cash flows is above the sample median and their price to book ratio is below the sample median in fiscal year t; otherwise is scored 0. Audit quality refers to the quality of the auditor. Indicator variable with firm j scored one (1) if their auditor in fiscal year t is a Big 4 audit firm; otherwise scored zero (0). Findings -The empirical result provides supports for the hypothesis suggesting that company managers with high free cash flow and low-growth opportunities tend to use their discretion to select income increasing accounting choices. Investigation based on each of the three-country sub samples indicates that the relationship between SFCF and managers' income-increasing accounting choice is applicable in Malaysia, partially applicable in Singapore but it is not valid in Indonesia. In addition, the statistical analyses based on all sample and country sub-samples indicate that audit quality has negative relationships with earnings management measure. The result of univariate analysis suggests that mean of DACs in companies audited by Big 4 auditors are significantly smaller compared to that of in non-Big 4 audited firms. However, the results of multivariate analysis suggest that audit quality has only partially significant association with earnings management. Moreover, this study finds that Big 4 auditors insignificantly moderate the SFCF-earnings management relationships. Practical implications -This research may have implications for ...

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“…The Francis and Wang model has been used in previous studies by Marra et al (), Dierynck et al (), Houque et al () and Gotti and Mastrolia ().…”

mentioning

confidence: 99%

Financial Performance Adjustment in English Local Governments

Arcas

Martí

2016

Australian Accounting Review

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This paper analyses financial performance adjustment in English local governments and the specific accruals used to achieve it. Based on statistical approaches used in previous literature, our results indicate the use of abnormal accruals in English local governments in order to report surpluses/deficits close to zero as well as to avoid reporting big deficits. We find that depreciation and impairment expense of fixed assets is the item most significantly related to abnormal accruals. Consistent with the conservatism theory, local governments with higher leverage use more income‐decreasing accounting policies.

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The Effect on Financial Reporting Quality of an Exemption from the SEC Reporting Requirements for Foreign Private Issuers

Cited by 12 publications

References 20 publications

Are International Financial Reporting Standards–Based and U.S. GAAP–Based Accounting Amounts Comparable? Evidence From U.S. ADRs

Are International Financial Reporting Standards–Based and U.S. GAAP–Based Accounting Amounts Comparable? Evidence From U.S. ADRs

The impact of surplus free cash flow and audit quality on earnings management

Financial Performance Adjustment in English Local Governments

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