The Impact of Us Gaap Reconciliation Requirements on Choice of Foreign Stock Exchange for Firms from Common Law and Code Law Countries

Posted: 14 Apr 2005

See all articles by Robert B. B. Durand

Robert B. B. Durand

Curtin University of Technology - School of Economics and Finance - Department of Finance and Banking

Ann Tarca

University of Western Australia

Abstract

The aim of this study is to investigate whether the impact of the SEC's Form 20-F reconciliation requirements on non-US firms' choices of foreign stock exchanges was different for firms from common law and code law countries, that is, for firms with different accounting, legal and financial systems. We examined attributes of 253 cross-listed firms from the United Kingdom, Australia, France, Germany and Japan in the 1999 financial year. We found the ability to raise further capital in the home market was relevant for firms from both groups. In addition, firms from code law countries listing on the NYSE or NASDAQ were more likely to have greater foreign revenue and lower leverage. We expected differences in accounting requirements to be a greater barrier to listing on the NYSE or NASDAQ for code law firms. However, we found firms from code law countries were more likely to select a Form 20-F exchange than firms from common law countries, providing support for suggestions that a NYSE/NASDAQ cross-listing has a bonding role for code law firms (Coffee, 2002).

Keywords: Harmonization of accounting standards, US GAAP Form 20-F reconciliation, Cross-listing, Foreign stock exchange listing, Code law/common law legal systems.

JEL Classification: G11, G13, M41, M47

Suggested Citation

Durand, Robert B. B. and Tarca, Ann, The Impact of Us Gaap Reconciliation Requirements on Choice of Foreign Stock Exchange for Firms from Common Law and Code Law Countries. Available at SSRN: https://ssrn.com/abstract=691704

Robert B. B. Durand (Contact Author)

Curtin University of Technology - School of Economics and Finance - Department of Finance and Banking ( email )

Bentley 6102 WA
Australia

HOME PAGE: http://tiny.cc/y85rh

Ann Tarca

University of Western Australia ( email )

Business School
35 Stirling Highway
Crawley WA 6009
Australia
+61 8 6488 3868 (Phone)
+61 8 6488 1047 (Fax)

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