Financial Analysts' Forecast Revisions as Evidence of the Usefulness of Form 20f Reconciliations and Disclosures
41 Pages Posted: 12 Apr 1999
Date Written: April 5, 1999
This paper contributes to the ongoing debate resulting from the SEC's requirement that foreign firms that trade on US exchanges reconcile their domestic financial statements to US GAAP. We address this issue by examining whether financial analysts revise their earnings forecasts following the filing of the 20F information. Since analysts are among the most informed market participants, their use (or lack of use) of the Form 20F information should provide direct evidence regarding the relevance of the 20F. Our results support that analysts use the earnings reconciliations contained in Form 20F, but we find no evidence that analysts use the equity reconciliations contained therein. We also find no evidence that analysts use the additional (item 18) US GAAP disclosures in Form 20F.
JEL Classification: M41, M45, G29
Suggested Citation: Suggested Citation