Eliminating the Form 20-F Reconciliation Financial Reporting Quality and Audit Pricing

  • 林 易宏

Student thesis: Doctoral Thesis


The two essays in my dissertation focus on the effect of eliminating the form 20-F reconciliation on accounting restatements and audit pricing The first essay investigates whether the incidence of accounting restatement is influenced by the Securities and Exchange Commission (SEC)’s decision to eliminate form 20-F reconciliation requirement for foreign cross-listed companies that follow International Financial Reporting Standards (IFRS) The results show that the elimination reduced accounting restatements and that this association is more prominent when the cross-listed companies engaged auditor industry specialists Comparing from Kim et al (2012) our study can provide more significant evidence that IFRS reporting quality which disclosed from cross-listed firms has been well-recognized and judged by investors or reports users further The results also support FASB’s (2002) and the SEC’s (2003) expectations that professional judgments provided by auditor industry specialists result in more meaningful and informative financial statements which is extremely indispensable to more principles-based accounting standards (i e IFRS) The second essay 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 This paper finds that the elimination of this requirement decreased audit fees and the association is positive when foreign cross-listed firms engage auditor industry specialists The evidence reinforces the argument that managers of foreign cross-listed firms have a greater tendency to manage earnings when there is a need to reconcile earnings (Bradshaw et al 2004; Lang et al 2006; Kang et al 2012) and thus eliminating the form 20-F reconciliation was able to decrease audit risk by reducing financial misstatements impede managerial manipulation of earnings improve financial reporting quality and decrease audit fees The results also support the SEC’s (2007) claim that eliminating form 20-F reconciliation would reduce the preparation costs and regulatory burdens for foreign private issuers
Date of Award2014 Dec 15
Original languageEnglish
SupervisorHua-Wei Huang (Supervisor)

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