Discussion of "Liability of Foreignness: The Impact of Elimination of the Reconciliation Requirement on International Asset Allocation by U.S. Investors"

Elimination of the 20-F filing requirement in 2007¹ was part of the Securities and Exchange Commission's (SEC) overall master plan to eventually allow or require all issuers to file International Financial Reporting Standards (IFRS) prepared financial statements. Long before the SEC considered eliminating the Form 20-F reconciliation requirement, the desire to move to one high-quality International Accounting Standard was formalized when the Financial Accounting Standards Board (FASB), under the supervision of the SEC, entered into the Norwalk agreement, which committed the FASB to working with the International Accounting Standards Board (IASB) with the aim to substantially unite the two standards.² The boards agreed to work jointly together on several key area convergence projects with the ultimate goal to reduce or eliminate differences between the two standards. In February 2006, the two boards renewed their commitment to unified major standards including the declaration that the boards were determined to...