Delayed Foreign Filings and Investor Attention: Evidence from Form 20-F Reconciliation Elimination

Abstract

We argue that the 2007 SEC elimination of the U.S. GAAP reconciliation requirement for IFRS-reporting cross-listed firms increased disclosure redundancy across home country and U.S. ADR markets, affecting U.S. market investors' information acquisition behavior. First, we document a decreased yet significant delay between information release dates in the two countries following reconciliation elimination. Furthermore, greater delay in IFRS firms' unreconciled Form 20-F filings decreases 20-F download activity and reverses potential liquidity benefits of timely disclosure. We also document an increase in return co-movement across the home country and the U.S., suggesting increased market integration. Furthermore, there are increased return and volume reactions to home country earnings announcements in the ADR market post-SEC deregulation. Our results bring novel insights regarding the important implications of timeliness of Form 20-F filings in conjunction with the reconciliation elimination's effects on information integration across the two markets on investor information acquisition behavior.