This study examines the incremental information of Canadian accounting principles when
financial information according to US GAAP is known. The impact of SEC-required
reconciliations of net income and voluntary disclosures of shareholders' equity
reconciliations on share returns and prices are analysed. Based on such analysis,
inferences are made about the incremental informativeness of Canadian GAAP.
This study follows the concurrent study by Richardson et al. that examines the question of
incremental informativeness of Canadian GAAP given the benchmark information
provided by US GAAP. This study offers three contributions to this literature. First, it
examines the components of reconciliation data and assesses their impact on share returns
and prices. Second, it analyzes the effect of exchange rate flucuations on the relationship
between reconciliation data and share returns. Third, it analyzes the impact of the
dominant trading market on the relationship between reconciliation data and share returns.
Unlike Richardson et al., the results of this study suggest that Canadian GAAP offers very
limited incremental information when US GAAP financial information is known for
Canadian firms that crosslist on the Toronto Stock Exchange and on a US exchange.
Convergence of Canadian and US GAAP during the 1993-94 sample period used in this
study may partially explain why its results are differenct from the 1983-93 sample period
used by Richardson et al.
Some components of the reconciliation data were statisticly significant in explaining
crosslisted firms' returns (prices). However, exchange rate flucuations, location of
dominant market and reporting currenies were not statistically significant in explaining
crosslisted firms' returns (prices).
| Identifer | oai:union.ndltd.org:LACETR/oai:collectionscanada.gc.ca:BVAU.2429/6026 |
| Date | 11 1900 |
| Creators | McDorman, Lawrence Derek |
| Source Sets | Library and Archives Canada ETDs Repository / Centre d'archives des thèses électroniques de Bibliothèque et Archives Canada |
| Language | English |
| Detected Language | English |
| Type | Electronic Thesis or Dissertation |
| Relation | UBC Retrospective Theses Digitization Project [http://www.library.ubc.ca/archives/retro_theses/] |
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