Trading Volume Reaction to the Earnings Reconciliation from IAS to U.S. Gaap on Form 20-F

39 Pages Posted: 9 May 2004

Date Written: April 2004


This paper examines the trading volume reaction to the reconciliation of IAS-based earnings to U.S. GAAP on Form 20-F filed during the period of 1995-2001. The sample includes all non-U.S. firms that use IAS as their primary reporting standards and reconcile their earnings to U.S. GAAP in their Form 20-F with available filing dates. The research question is of particular interest to policy makers when evaluating the necessity of reconciling the earnings. We find that the absolute magnitude of the earnings reconciliation is significantly and positively associated with trading volume around the Form 20-F filing dates, which supports the assertion that earnings reconciliation on Form 20-F provides additional information content to U.S. market investors beyond that provided by the IAS earnings. These findings also hold after the Core Standards Project and for various event windows. Moreover, the results indicate a stronger reaction for positive earnings reconciliation than for negative reconciliation.

Keywords: Trading volume reaction, earnings reconciliation, Form 20-F, IAS

JEL Classification: M41, M44, M47, G14, G15, G38

Suggested Citation

Chen, Lucy Huajing and Sami, Heibatollah, Trading Volume Reaction to the Earnings Reconciliation from IAS to U.S. Gaap on Form 20-F (April 2004). Available at SSRN: or

Lucy Huajing Chen

Villanova University ( email )

United States
610-519-6321 (Phone)

Heibatollah Sami (Contact Author)

Lehigh University ( email )

Bethlehem, PA 18015
United States
610-758-3407 (Phone)

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