Analyst Following and Forecast Accuracy After Mandated IFRS Adoptions

Tan, Hongping; Wang, Shiheng; Welker, Michael

doi:10.1111/j.1475-679x.2011.00422.x

Cited by 327 publications

(208 citation statements)

References 31 publications

Supporting

Mentioning

186

Contrasting

Unclassified

Order By: Relevance

“…They also show that, after adopting IFRS, the forecasts' dispersion seems to decrease in most countries. Tan et al, (2011), by studying the impact of IFRS in 25 countries, show that the quality of the financial analysts' forecasts is improved only for foreign analysts attracted by the adoption of these standards.…”

Section: Ifrs and Analysts' Forecast Propertiesmentioning

confidence: 99%

IFRS Mandatory Adoption Effect on the Information Asymmetry: Immediate or Delayed?

Turki¹,

Wali²,

Boujelbène³

2017

AABFJ

View full text Add to dashboard Cite

The purpose of this paper is to examine the relationship between the mandatory adoption of IFRS/IAS and the information content of earnings in the European Union. More accurately, this study aims to determine if the effect of IFRS adoption on the level of information asymmetry, apprehended by the cost of capital and the financial analysts' forecasts, is immediate or delayed. Based on a longitudinal study, we find evidence that for the two first years of adoption, international standards reduces significantly the cost of capital and the dispersion of the financial analysts' forecasts. Furthermore, the magnitude of this effect increases with increasing the number of years after IFRS adoption. The findings further show that the effect of IFRS adoption on financial analysts' errors is not immediate and that the errors decrease from the third year following the date of the first adoption.Overall, the findings of this study highlight the importance of adopting IFRS in the reduction of information asymmetry. AbstractThe purpose of this paper is to examine the relationship between the mandatory adoption of IFRS/IAS and the information content of earnings in the European Union. More accurately, this study aims to determine if the effect of IFRS adoption on the level of information asymmetry, apprehended by the cost of capital and the financial analysts' forecasts, is immediate or delayed. Based on a longitudinal study, we find evidence that for the two first years of adoption, international standards reduces significantly the cost of capital and the dispersion of the financial analysts' forecasts. Furthermore, the magnitude of this effect increases with increasing the number of years after IFRS adoption. The findings further show that the effect of IFRS adoption on financial analysts' errors is not immediate and that the errors decrease from the third year following the date of the first adoption.Overall, the findings of this study highlight the importance of adopting IFRS in the reduction of information asymmetry. JEL Classification: M40, G34

show abstract

Section: Ifrs and Analysts' Forecast Propertiesmentioning

confidence: 99%

IFRS Mandatory Adoption Effect on the Information Asymmetry: Immediate or Delayed?

Turki¹,

Wali²,

Boujelbène³

2017

AABFJ

View full text Add to dashboard Cite

show abstract

“…Among other things, studies show positive abnormal stock returns during important events leading up to IFRS adoption (Armstrong et al, 2010); an increase in market liquidity and decrease in cost of capital (Daske et al, 2008(Daske et al, , 2013Li, 2010; 10! Florou and Kosi, 2013); more foreign investments in debt and equity instruments of firms domiciled in IFRS adopting countries (Beneish et al, 2010;DeFond et al, 2011;Brüggemann et al, 2012) together with a reduction in home bias among U.S. investors (Khurana and Michas, 2011;Shima and Gordon, 2011); higher information content of IFRS earnings ; an increase in stock price informativeness (Beuselinck et al, 2009); and improvements in financial analysts' information environment (Byard et al, 2011;Tan et al, 2011;Horton et al, 2013). 8 Based on these findings, one could conclude that mandatory IFRS adoption has improved the transparency and comparability of financial statements as well as reduced information asymmetries.…”

Section: Prior Evidence and Alternative Explanations For Capital-markmentioning

confidence: 99%

Mandatory IFRS Reporting and Changes in Enforcement

2012

View full text Add to dashboard Cite

In recent years, reporting under International Financial Reporting Standards (IFRS) became mandatory in many countries. The capital-market effects around this change have been extensively studied, but their sources are not yet well understood. This study aims to distinguish between several potential explanations for the observed capital-market effects. We find that, across all countries, mandatory IFRS reporting had little impact on liquidity. The liquidity effects around IFRS introduction are concentrated in the European Union (EU) and limited to five EU countries that concurrently made substantive changes in reporting enforcement. There is little evidence of liquidity benefits in IFRS countries without substantive enforcement changes even when they have strong legal and regulatory systems. Moreover, we find similar liquidity effects for firms that experience enforcement changes but do not concurrently switch to IFRS. Thus, changes in reporting enforcement or (unobserved) factors associated with these changes play a critical role for the observed liquidity benefits after mandatory IFRS adoption. In contrast, the change in accounting standards seems to have had little effect on market liquidity. AbstractIn recent years, reporting under International Financial Reporting Standards (IFRS) became mandatory in many countries. The capital-market effects around this change have been extensively studied, but their sources are not yet well understood. This study aims to distinguish between several potential explanations for the observed capital-market effects. We find that, across all countries, mandatory IFRS reporting had little impact on liquidity. The liquidity effects around IFRS introduction are concentrated in the European Union (EU) and limited to five EU countries that concurrently made substantive changes in reporting enforcement. There is little evidence of liquidity benefits in IFRS countries without substantive enforcement changes even when they have strong legal and regulatory systems. Moreover, we find similar liquidity effects for firms that experience enforcement changes but do not concurrently switch to IFRS. Thus, changes in reporting enforcement or (unobserved) factors associated with these changes play a critical role for the observed liquidity benefits after mandatory IFRS adoption. In contrast, the change in accounting standards seems to have had little effect on market liquidity.JEL classification: G14, G15, G30, K22, M41, M48

show abstract

“…Examples of this include increased informational content in published accounting reports (Landsman, Maydew & Thornock, 2012), increased coverage and accuracy when predicting earnings on the part of market analysts (Tan, Wang & Welker, 2011), and increased shareholder liquidity (Christensen, Hail & Leuz, 2013), among others.…”

Section: Accounting Standardization -Ifrsmentioning

confidence: 99%

IFRS, synchronicity, and financial crisis: the dynamics of accounting information for the Brazilian capital market

Figlioli

Lemes

Lima

2017

Rev. contab. finanç.

View full text Add to dashboard Cite

This study aims is to investigate the synchronicity levels of shares traded on the spot market of the São Paulo Stock, Commodities, and Futures Exchange (BM&FBOVESPA) in relation to the accounting convergence process towards International Financial Reporting Standards (IFRS) in Brazil. The term synchronicity refers to the amount that company-specific information and market information are reflected in stock prices. The more share prices reflect company-specific information rather than market information, the greater the informational content of these prices will be in terms of representing the economic value of a particular company. For this investigation, information on companies and shares from 2005 to 2015 was collected, excluding the financial sector. The data were analyzed using cross-sectional and panel regressions. The results indicate a reduction in the synchronicity levels of stocks in the period of full adoption of IFRS in Brazil from 2010 onwards. From 2008 to 2009, which includes the partial adoption of IFRS in Brazil, statistically significant results were not found for the synchronicity levels of shares. However, for times of financial crisis, evidence was found of a reduction in the relevance of accounting information even with the adoption of international accounting standards. The results obtained for the Brazilian context do not support the idea that the adoption of IFRS necessarily causes an increase in the informational content of financial statements and that relevant information is consequently reflected in stock prices.

show abstract

Analyst Following and Forecast Accuracy After Mandated IFRS Adoptions

Cited by 327 publications

References 31 publications

IFRS Mandatory Adoption Effect on the Information Asymmetry: Immediate or Delayed?

IFRS Mandatory Adoption Effect on the Information Asymmetry: Immediate or Delayed?

Mandatory IFRS Reporting and Changes in Enforcement

IFRS, synchronicity, and financial crisis: the dynamics of accounting information for the Brazilian capital market

Contact Info

Product

Resources

About