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How Representative Are Firms That Are Cross-Listed in the United States? An Analysis of Accounting Quality


  • Mark Lang
  • Jana Smith Raedy
  • Michelle Higgins Yetman


We provide evidence on the characteristics of local generally accepted accounting principles (GAAP) earnings for firms cross-listing on U.S. exchanges relative to a matched sample of foreign firms currently not cross-listing in the United States to investigate whether U.S. listing is associated with differences in accounting data reported in local markets. We find that cross-listed firms differ in terms of the time-series properties of earnings and accruals, and the degree of association between accounting data and share prices. Cross-listed firms appear to be less aggressive in terms of earnings management and report accounting data that are more conservative, take account of bad news in a more timely manner, and are more strongly associated with share price. Furthermore, the differences appear to result partially from changes around cross-listing and partially from differences in accounting quality before listing. We do not observe a similar pattern for firms cross-listed on other non-U.S. exchanges or on the U.S. over-the-counter market, suggesting a unique quality to cross-listing on U.S. exchanges. Copyright University of Chicago on behalf of the Institute of Professional Accounting, 2003.

Suggested Citation

  • Mark Lang & Jana Smith Raedy & Michelle Higgins Yetman, 2003. "How Representative Are Firms That Are Cross-Listed in the United States? An Analysis of Accounting Quality," Journal of Accounting Research, Wiley Blackwell, vol. 41(2), pages 363-386, May.
  • Handle: RePEc:bla:joares:v:41:y:2003:i:2:p:363-386

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