International Financial Reporting Standards (IFRS) are required for consolidated financial statements of all European Union (EU) publicly traded companies starting from the December 2005 fiscal year end [Regulation (EC)]; and endorsed by the International Organization of Securities Commission (IOSCO) for its member countries beginning in 2000. We examine the challenges and benefits, including value relevance, of the adoption of IFRS by DAX-30 companies, the German premium stock market. Based on a survey sent to DAX-30 company executives, we find most companies agreeing that implementing IFRS should improve the comparability of financial statements. The complex nature, high cost of adopting and lack of guidance for implementing IFRS, as well as increased volatility of earnings after adopting IFRS, are listed among the most important challenges of conversion to IFRS. We use regression to measure another benefit: the value relevance of book values of earnings and equity in explaining market values of DAX-30 companies during the period 1995-2004. Using

International Accounting Standard (IAS) 14 on segment reporting was revised in 1997. IAS 14R substantially changed segment reporting requirements in response to numerous criticisms of the original standard. The objective of this study is to determine how IAS 14R affected the segment disclosure practices of companies claiming to comply with IAS. This paper examines the following questions: (1) What items of information are disclosed under IAS 14 and IAS 14R? Was there a gain or a loss of information disclosed for business and geographic segments with the implementation of IAS 14R? (2) Has the number of business and geographic segments reported by companies changed with the implementation of IAS 14R? (3) Are companies disclosing the items required by IAS 14R? (4) Are companies' segment reporting practices related to size, country of domicile, industry, international listing status, and having a then-Big Five auditor? We find that the impact of IAS 14R is mixed. Companies are responding to IAS 14R, but not wholly embracing it. Our findings suggest that companies audited by a Big Five (now Big Four) firm and, to a lesser extent, companies that are larger, listed on multiple stock exchanges, and from Switzerland have greater compliance with IAS 14R than other companies in our study.

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We test a hypothesis that financial analysts use a simple algorithm of an equal growth rate for expenses as is for sales when they forecast corporate earnings by examining the errors in analysts' earnings forecasts. If expenses change at a lower rate than sales in absolute terms due to the fixed portion of expenses, then analysts' forecasted expenses will be higher (lower) than actual when they forecast an increase (decrease) in sales, resulting in lower (higher) forecasted than actual earnings assuming that analysts have perject sales forecasts. Using 3,220 individual financial analysts' sales and earnings forecasts during the period of 1996-2005 for which sales forecast errors are close to zero, we find that the errors in analysts' earnings forecasts are positively related to their expected sales growth rate. This result is consistent with the hypothesis that analysts' imperject adjustments of cost behavior result in systematic errors in their earnings forecasts.1. Francis (1997) summarizes three possible explanations for analysts' optimistic forecasts examined by prior studies: an information-processing bias, a reporting bias, and a selection bias. Analysts may report their true earnings expectations but make predictable processing errors as a result of their decision heuristics (Affleck-Graves, Davis, and Mendenhall [1990]). Analysts also may have an incentive to report higher forecasts than their expectations when trying to attract lucrative investment banking deals (Dechow, Sloan, and Sweeney [2000]) or wanting to obtain further access to private information from managers (Francis and philbrick [1993]). Another possibility may be that the observed optimistic forecasts reflect analysts' reluctance to issue unfavorable forecasts (McNichols and O'Brien [1997]).2. For example, Noreen and Soderstrom (1994) show that overhead costs do not change in proportion to cost drivers of activity-based costs because of the fixed portion of overhead costs.3. Gu, Jain, and Ramnath (2006) make the same assumption on cost behavior. 4. To increase the possibility of satisfying the first assumption, we present supplementary test results in Section 4, in which we use a subset of our sample, including only those firms with the actual growth rate of operating costs (the sum of cost of goods sold, selling and administrative expenses, and depreciation expense) lower than that of sales in absolute terms.