Another difficulty in making inferences between GAAPs using a sample of cross-listed
firms is that cross-listed firms may have fundamentally different financial reporting practices than do non-cross-listed firms. As an example, Lang et al. (2003b) investigate whether the value relevance and manipulation of local GAAP earnings are different for firms cross-listed on US exchanges than for those that are not. Since the Form 20-F regulations do not speak to the reporting of local GAAP earnings, there will be no differences in accounting standards across the groups. In addition, home country institutional factors are held constant by matching cross-listed and non-cross-listed firms. They find that the local GAAP earnings of cross-listed firms are managed less, recognize bad news on a more timely basis, and have a higher association with share prices than do local GAAP earnings of their local non-cross-listed counterparts.