Does Form 20-F reconciliation elimination for IFRS filers affect the risk forecasting ability of accounting numbers?

She-Chih Chiu, Hsuan-Chu Lin, Chin-Chen Chien and Chia-Chen Liang

Journal of Contemporary Accounting and Economics, 2022, vol. 18, issue 3

Abstract: This study investigates the effect of the elimination of Form 20-F reconciliation items on the risk relevance of accounting information. Using a sample of U.S. companies and American depositary receipts adopting domestic standards that are generally in accordance or fully compliant with IFRS, this paper finds that IFRS better reflect macroeconomic fluctuations after Form 20-F reconciliation elimination. This paper also finds that Form 20-F reconciliation elimination has no negative effect on the usefulness of accounting data under IFRS in the formulation of superior risk forecasts. Further, this paper finds that the elimination of Form 20-F reconciliation items is associated with lower idiosyncratic risk. Overall, the findings indicate some benefits from Form 20-F reconciliation elimination.

Keywords: Risk relevance; Systematic risk; Market risk; Accounting risk; Elimination of Form 20-F reconciliation (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jocaae:v:18:y:2022:i:3:s1815566922000285

DOI: 10.1016/j.jcae.2022.100333

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