Accounting principle choice by ADR firms and auditors' fees Online publication date: Sat, 27-Dec-2014
by David L. Senteney; Grace H. Gao; Mohammad S. Bazaz
International Journal of Accounting, Auditing and Performance Evaluation (IJAAPE), Vol. 10, No. 4, 2014
Abstract: This paper examines whether ADR issuers, selecting US GAAP, IFRS, or home-country accounting principles for the preparation of financial statements accompanying the Form 20-F filing, are paying different auditors' fees. We employ the Heckman Probit decision choice model and two-stage OLS correction to estimate the impact of selection of Form 20-F accounting standards upon ADR firms periodic auditors' fees. We find that firms choosing to present US GAAP financial statements incur the highest auditors' fees, while firms choosing to present IFRS financial statements accompanying the Form 20-F filing incur the second largest auditors' fees. They also find that ADR firms incur significantly greater costs (associated with Form 20-F filings) than non-US firms opting not to list on the major US stock exchanges in order to improve comparability with other firms listed on the major US exchanges.
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