Resumen de A decade of reconciliation to US GAAP: What have we learned?

José Luis Ucieda Blanco

• The discussion on the usefulness of reconciliations disclosed in the Form 20-F that non-US companies are required to prepare is not over. Prior research using different methodologies found mixed results. Potential explanations are (1) companies from different countries in the samples, (2) definition of the regression windows, (3) exact event date, and (4) the development of a coping mechanism and multiprinciple capability by investors. While the first three causes are methodological problems, the last one needs further attention and research.

  We collected the Forms 20-F of all Spanish companies listed in the US stock markets during the period 1991-2001 and analyzed the reconciliations to NI and SE to US GAAP. We classified all reconciling items into a few categories and studied their frequency, persistence, significance, and materiality. Our main findings show an increasing number of adjustments along the period but only adjustments dealing with Fixed Assets, Business Combinations, Employee Benefits, Deferred Taxes, Investments, Consolidation, and Provisions, were material. From a theoretical viewpoint, we discuss future reconciliations from 2007, when companies in the sample adopt IAS/IFRS.