An analysis of 50 European companies that began reporting using U.S.GAAP over the period 1997 to 2004 found which of the following?
I.Earnings under GAAP were generally lower than earnings under the home country's rules.
II.The differences in earnings under the two regimes were all less than 10 percent.
III.The stocks of the 50 companies generally reacted positively when the disclosures were made.
IV.Executives had concerns over the impact of reporting under U.S.GAAP.

Question

Quizplus · Accepted Answer

I, III, and IV are correct. Earnings under GAAP were often found to be lower than under home country rules, indicating a conservative approach by GAAP. The stocks of companies generally reacted positively, suggesting investor confidence in the transparency and comparability provided by GAAP. Executives often had concerns over the complexity and potential impact of adopting U.S. GAAP, reflecting apprehensions about the transition and its implications. Statement II is incorrect because the differences in earnings could vary widely, not necessarily being less than 10 percent.

An Analysis of 50 European Companies That Began Reporting Using