Does the Form 20-F reconciliation help ensure the financial reporting quality of cross-listed IFRS firms? A comparison with cross-listed non-IFRS firms

Yi-Hung Lin, Hua-Wei Huang, Mai Dao, Ting-Chiao Huang

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This paper investigates whether financial reporting quality improves or deteriorates after the US Securities and Exchange Commission (SEC) decided to eliminate the Form 20-F reconciliation requirement for foreign cross-listed firms following International Financial Reporting Standards (IFRS). Using a difference-in-differences research design, we find that cross-listed IFRS firms are less likely to restate financial statements after the SEC revoked their reconciliation requirement, as compared to cross-listed non-IFRS firms that still need to prepare the reconciliation. Moreover, such a reduction in the occurrence of financial restatements is more prominent when cross-listed IFRS firms engage global industry-specialist auditors and originate from common law countries. Together, this paper lends support to the elimination of the reconciliation requirement for cross-listed IFRS firms and highlights the important roles of auditors and the legal environment in shaping financial reporting quality.

Original languageEnglish
Pages (from-to)442-474
Number of pages33
JournalInternational Journal of Auditing
Issue number2
Publication statusPublished - Jul 2021


  • Form 20-F reconciliation
  • IFRS
  • industry specialization
  • legal regime
  • restatements

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