This study examines whether the relatively rule-based U.S. Generally Accepted Accounting Principles (GAAP) and the more principle-based International Accounting Standards/International Financial Reporting Standards (IAS/IFRS) provide different opportunities for earnings management (EM). Management can use strategic management decisions to smooth income that may or may not maximize the firm’s value under either the rule-based or principle-based accounting standard. Comparisons of accounting standards across different markets and countries are difficult because of the differences in institutional factors and corporate governance issues (Frost and Pownall, 1994; Leuz, 2003). This problem is controlled via the unique feature of dual listing in the current German Frankfurt Stock Exchange. Firms that choose to list their shares under the Prime Standard can report in accordance with either the U.S. GAAP or the IAS/IFRS. Findings suggest that EM through R&D expenditure and deferred tax expense is higher for the IAS/IFRS firms compared to the U.S. GAAP firms and that EM through discretionary accruals is higher for the US-GAAP firms compared to the IAS/IFRS firms. The results inform US regulators considering IAS/IFRS adoption.