How Different GAAPs Affect Performance of Valuation Models : Evidence from Asia-Based Companies

Use of accounting information to assess a firm's value is a very important subject for financial analysts, investors, lenders, policy-makers, and other market participants. This study compares the relative performance of three valuation models based on a sample of all relevant American Depositary Shares (ADRs) from selected Asian countries and a matched sample of U.S. counterparts, using accounting variables reported under U.S. generally accepted accounting principles (GAAP), non-U.S. GAAP, and IFRS. Understanding how these different GAAPs affect valuation is increasingly important, especially after the U.S. SEC decided in 2007 to accept IFRS, in place of U.S. GAAP, for financial reports of non-U.S. companies