Reconciliation Requirements of From 20-F : The Strategies of the SEC and EC

The purpose of this paper is to analyze the choice among the alternatives of bases of accounting standards at the international level in U.S. securities markets. First, the paper provides an explanation of the reconciliation requirements in Form 20-F for FPI (Foreign private issuer). FPI is required to reconcile with U.S. GAAP. As the securities markets have become internationalized, it became necessary for the SEC to review to the reconciliation requirements. Second, the strategies of both the SEC and EC for convergence to IFRS are discussed. The EC has required the removal of these requirements. In the EU market, third country issuers must prepare their financial information in accordance with IFRS or equivalent standards. In order to make decisions, the SEC and EC engage in strategic actions. The author applies simple game theory to these actions