The impact of accounting services and the use of a wide range of proxies for accounting quality in organizations

Article history: Using 42,808 firm-year observations from 32 countries around the world, we investigate Received 23 August 2019 whether cross-listing in the US is associated with better accounting quality, and whether Revised 7 November 2019 investor protection moderates the effect of cross-listing on accounting quality. Our main Accepted 26 November 2019 results show firms that are cross-listed in the US exhibit more timely reporting of losses,Available online 4 December 2019 greater tendency to manage earnings downward, and more value relevance of accounting numbers as compared to their domestic counterparts. Cross-listed firms originating from. by showing evidence on the moderating effect of investor protection on accounting quality. Second, unlike prior studies which mostly focus only on ‘legal bonding’, the evidence documented in this study use both bonding and signalling theories in explaining the motivations underlying cross listing. More to the point, we show that cross-listed firms benefited not only from renting the superior corporate governance system of the US, but also through the improvement in their information environment arising from cross-listing. Third, as compared to the cross-listing and accounting quality literature that often focus only on the host-country environment, our research contributes towards the understanding on the role of institutional factors in curbing the manipulation of accounting numbers. More specifically, we provide evidence related.