Earnings Quality, Earnings Management, and Cross-listings: Evidence from French Firms

This paper examines the earnings quality of French firms cross-listed in the United States, United Kingdom and non-cross-listed french firms. We examine quality of financial reporting based on measures of earnings management, Timely Loss Recognition (TLR) and price-earnings association. We find that both cross-listings and non-cross-listings show significant earnings smoothing activities and tend to use accruals to manage earnings, and are not Timely in Loss Recognition. We surmise that cross-listing in the United States or United Kingdom has not changed the accounting choices of French cross-listing firms relative to firms that are not cross-listed. However, our findings show that the market considers earnings and book value data of cross-listing firms to be more informative than those of non-cross-listing firms.