Knowledge that Transforms

LIFO Liquidation, Tax incentives, Debt covenants, Inventory valuation

Auditing, Auditor litigation, Rule 10b-5, Auditor liability

Financial ratios, Valuation, Cross-country differences, Comparability

Disclosures, Litigation risk, Rule 10b-5, Discretionary disclosures

Value relevance, Equity investment, Predictive ability, Future earnings

Terrence B. O'Keefe, Dan A. Simunic, Michael T. Stein, The Production of Audit Services: Evidence from a Major Public Accounting Firm, Journal of Accounting Research, Vol. 32, No. 2 (Autumn, 1994), pp. 241-261

Voluntary disclosure, Proprietary costs, Disclosure credibility, Private information

Canadian firms that list securities on U.S. stock exchanges are generally required to provide a reconciliation of reported income measured using Canadian generally accepted accounting principles (GAAP) to reported earnings measured using U.S. GAAP. This paper examines both the magnitudes and the information content of the reported reconciliations between CanadianGAAP income and U.S.GAAP income. Two recent studies of cross-country GAAP differences do not address U.S.-Canada differences because of perceived similarities between GAAP in the two countries (Amir, Harris, and Venuti [1993] and McQueen [1993]). If U.S.-Canada GAAP differences are in fact unimportant, then no further examination is warranted. Professional bodies, however, are

Disclosures, Voluntary disclosures, Mandatory disclosures, International study

Auditing, Workpaper Review Performance, Manager performance, Senior performance