Investor protection, cross-listing and accounting quality

Khairul Anuar Kamarudin, Akmalia M. Ariff and Aziz Jaafar ()

Journal of Contemporary Accounting and Economics, 2020, vol. 16, issue 1

Abstract: Using 42,808 firm-year observations from 32 countries around the world, we investigate whether cross-listing in the US is associated with better accounting quality, and whether investor protection moderates the effect of cross-listing on accounting quality. Our main results show firms that are cross-listed in the US exhibit more timely reporting of losses, greater tendency to manage earnings downward, and more value relevance of accounting numbers as compared to their domestic counterparts. Cross-listed firms originating from high investor protection jurisdictions, particularly in high anti-director rights and common law countries, exhibit greater tendency to recognise a more timely reporting of losses and to manage earnings downward but exhibit lower value relevance of earnings as compared to cross-listed firms domiciled in low anti-director rights and non-common law countries. These results suggest that the strength of investor protection in home country plays an important role in determining the quality of accounting numbers of cross-listed firms.

Keywords: Cross-listing; Accounting quality; Earnings management; Value-relevance; Conservatism (search for similar items in EconPapers)
JEL-codes: G18 G38 M41 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jocaae:v:16:y:2020:i:1:s1815566919301195

DOI: 10.1016/j.jcae.2019.100179

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