An International Meeting of the American Accounting Association American Accounting Association 2006 Annual Meeting August 6–9, 2006 Washington, D.C.

Mary Michel
Manhattan College

Abstract: The study examines the variety and magnitude of financial disclosures of foreign life insurance companies listing American Depository Receipts (ADRs) on U.S. stock exchanges. In 2004, seven of the ten largest stock life insurers listed in the U.S. prepared financial reports using generally accepted accounting principles (GAAP) in the Netherlands, Canada, France, the U.K. and Hong Kong. Foreign financial statements are reconciled to United States GAAP on Securities and Exchange Commission (SEC) Form 20-F (or 40-F for Canadian Firms). The analysis focuses on significant areas where foreign accounting policies differ from U.S. GAAP: investment assets, insurance contracts and deferred policy acquisition costs. For the seven sample firms in 2004, the average earnings reconciliation to U.S. GAAP is a small negative percent of foreign GAAP shareholders’ equity. The average reconciliation to U.S. GAAP shareholders’ equity is a large positive percentage of foreign GAAP shareholders’ equity.

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