Inflation accounting and 20-F disclosures: Evidence from Mexico

This paper analyzes features of the Mexican accounting model and describes the effect of the accounting differences between Mexico and the US on the relation between equity prices and accounting information reported in the 2 countries. The influence of US accounting in Mexico is evident in several areas. Still, the Mexican accounting and reporting model addresses special issues in a manner different from that of the US. This paper finds no significant relation between the American Depositary Receipt price and net income and equity reconciliations from Mexican to US GAAP. The results call into question once again the validity and usefulness of the SEC's required reconciliations to US GAAP.