A Matter of Attention: Evidence from Form 20-F Reconciliation Elimination and Timeliness of 20-F Filings

• In Event: Financial Reporting--Disclosure

Abstract

This paper examines how investors acquire information of foreign firms cross-listed in the U.S. by exploiting the SEC's 2007 decision to eliminate the reconciliation requirement for firms following IFRS. We present novel evidence that less investors download IFRS firms' unreconciled Form 20-Fs with the SEC when they are filed with a greater delay relative to local earnings releases. This shift in investor attention appears to be more pronounced for firms with lower information acquisition costs from local earnings reports (low language distance from English). We also document
changes in trading volume patterns and return comovements between the home market earnings announcement and 20-F filing consistent with more investors shifting attention to information released in the home country.
Taken together, our results shed light on how investors acquire information and shift their attention from 20-F filings to home market earnings announcements following the SEC's decision to change disclosure standards for some cross-listed firms.

Authors

• Edward Sul, George Washington University

• Jedson P Pinto, University of North Carolina-Chapel Hill