TY - JOUR

T1 - Investor Protection, Cross-listing and Accounting Quality

AU - Kamarudin, Khairul Annuar

AU - Ariff, Akmalia

AU - Jaafar, Aziz

N1 - 18 months embargo

PY - 2020/4

Y1 - 2020/4

N2 - 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.

AB - 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.

KW - Cross-listing

KW - accounting quality

KW - conservatism

KW - value-relevance

KW - earnings management

U2 - 10.1016/j.jcae.2019.100179

DO - 10.1016/j.jcae.2019.100179

M3 - Article

VL - 16

JO - Journal of Contemporary Accounting and Economics

JF - Journal of Contemporary Accounting and Economics

SN - 1815-5669

IS - 1

M1 - 100179

ER -