Eliminating the form 20-F reconciliation and audit pricing

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2 Citations (Scopus)


This study examines the impact of the Securities and Exchange Commission’s (SEC) policy in 2007 to eliminate the Form 20-F reconciliation requirements for foreign cross-listed firms following the International Financial Reporting Standards (IFRS) on audit pricing. We find that the elimination of this requirement decreases audit fees, and this fee decrease is less prominent when foreign cross-listed firms engage industry-specialist auditors. Our findings reinforce prior studies that found that managers of foreign cross-listed firms have a greater tendency to manage earnings when there is a need to reconcile earnings (Bradshaw, Bushee, and Miller 2004; Lang, Raedy, and Wilson 2006; Kang, Krishnan, Wolfe, and Yi 2012), and thus eliminating the Form 20-F reconciliation impedes managerial manipulation of earnings, decrease financial reporting risk, and audit fees. The results also provide direct evidence to support the SEC’s (2007) claim that eliminating the Form 20-F reconciliation would reduce the preparation costs and regulatory burdens for foreign issuers.

Original languageEnglish
Pages (from-to)1-19
Number of pages19
JournalJournal of International Accounting Research
Issue number1
Publication statusPublished - 2017 Mar 1

All Science Journal Classification (ASJC) codes

  • Business and International Management
  • Accounting

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