Article2010

The impact of IFRS on financial analysts' forecast accuracy in the Asia‐Pacific region

39 citations0/0 files storedPacific Accounting Review

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Auditing, Earnings Management, Governance Accounting Theory and Financial Reporting Forecasting Techniques and Applications

Abstract

Purpose This paper aims to provide an investigation into whether financial analysts' forecast accuracy differs between the pre‐ and post‐adoption of the international financial reporting standards (IFRS) in the Asia‐Pacific region, namely, for the countries of Australia, Hong Kong and New Zealand. In particular, this study seeks to examine whether the treatment of intangibles capitalized in the post‐IFRS period have positively aided analysts in forecasting future earnings of a firm. Design/methodology/approach Panel data analysis is applied over a period from 2001 to 2008. Findings Evidence is found to show intangibles capitalized under the new recognition and measurement rules of IFRS are negatively associated with analysts' earnings forecast errors. The results are robust to several model specifications across each of the countries, suggesting that the adoption of IFRS may indeed provide more value‐relevant information in financial statements for the users of financial reports. Originality/value This paper analyzed whether the adoption of IFRS has led to any changes in the accuracy of earnings forecasts. The results will be of help to analysts' earnings forecast activity and those with interest in the subject.

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References

2003Earnings management and investor protection: an international comparison 2003Conservatism in Accounting Part I: Explanations and Implications 1996Corporate Disclosure Policy and Analyst Behavior.2008Mandatory IFRS Reporting around the World: Early Evidence on the Economic Consequences 2003Incentives versus standards: properties of accounting income in four East Asian countries 1989Firm characteristics and analyst following 1995Factors Influencing Voluntary Annual Report Disclosures By U.S., U.K. and Continental European Multinational Corporations 2003Disclosure Practices, Enforcement of Accounting Standards, and Analysts' Forecast Accuracy: An International Study

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2013The Case for Global Accounting Standards: Arguments and Evidence 2017The effects of mandatory IFRS adoption on financial analysts’ forecast: Evidence from Jordan 2011The effect of IFRS adoption on accounting conservatism – New Zealand perspective

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