The Effect of IFRS and US.GAAP Reconciliation for ADR Firms on Earning Quality

• Main Authors: TAI-YUAN GUO, 郭泰源
• Other Authors: YUE-QIAO LIN
• Format: Others
• Language: zh-TW
• Published: 2013
• Online Access: http://ndltd.ncl.edu.tw/handle/56119570328258824762

碩士 === 國立中正大學 === 會計與資訊科技研究所 === 101 === In this study we investigate the role of differences between IFRS and US.GAAP accounting standards which affect earning quality. We employ two-stage rational expectations procedure developed by Mishkin (1983).We use this model to exam the relevance between market reaction and financial information. We also use this model to test accrual mispricing. The results are as follows. First, we find evidence that firms with US.GAAP reconciliation can mitigate mispricing and vice versa. The result represents that firms with US.GAAP reconciliation can provide more accurate information to investors. According to the result, investors can understand the accounting information's persistence better. Second, our research also tests the impacts of differences between IFRS and US.GAAP earning figure. The result reveals that when IFRS and US.GAAP earning with higher degree of difference, the investors prefer to use US.GAAP information and need US.GAAP reconciliation. Otherwise, for IFRS and US.GAAP earnings with lower degree of difference, the investors prefer to use IFRS information. Third, we use sample after 2007 to compare IFRS user with US.GAAP user in earning relevance and degree of mispricing. We find IFRS users have bad earning relevant and with height degree of mispricing. The results show that investors need US.GAAP reconciliation to compare with other US.GAAP base companies. Forth, we compare IFRS companies before and after 2007. We find out that IFRS users who disclose US.GAAP financial information and reconcile the differences between IFRS and US.GAAP have higher earnings quality.