Mandatory Adoption of IFRS and Analysts’ Forecasts: How Much Does Enforcement Matter?

Preiato, John P.; Brown, Philip; Tarca, Ann

doi:10.2139/ssrn.1499625

Cited by 26 publications

(25 citation statements)

References 53 publications

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“…For example, Byard et al (2011) found that forecast dispersion and forecast errors decrease but only in countries with both strong enforcement regimes and domestic accounting standards that differ significantly from IFRS. Similar conclusions are suggested in Horton, Serafeim and Serafeim (2013) and Preiato, Brown and Tarca (2013) who demonstrate that IFRS can have a positive impact on forecast accuracy if enforcement is strong.…”

Section: The Rationale Of Using Financial Analyst Performance As a Mesupporting

confidence: 80%

“…We selected these particular countries because of their variability in characteristics of prior accounting standard, accounting histories, as well as strength of enforcement. The five countries have regulatory systems with different origins and display varying strength of enforcement (La Porta, Lopez-de-Silanes, Shleifer & Vishny, 1998;Preiato et al, 2013). The varying financial accounting traditions of these countries (Nobes, 1983) reflect these differences, which is evident from Table 2.…”

Section: Public and Private Information As A Basis For Analysing The mentioning

confidence: 99%

“…A number of studies, such as Barth et al (2008), Byard et al (2011), Daske et al (2008 and Preiato et al (2013), also argue that the enforcement of accounting standards is pivotal for the realisation of quality increases through the introduction of IFRS. Enforcement of accounting standards varies substantially among countries (La Porta et al, 1998).…”

Section: Public and Private Information As A Basis For Analysing The mentioning

confidence: 99%

“…Enforcement of accounting standards varies substantially among countries (La Porta et al, 1998). For example, there is much to suggest that the strength of accounting standard enforcement varies across countries (Preiato et al, 2013) and this enforcement strength influences managerial discretion. Common law countries (i.e., the UK and Ireland) seem in general to have stronger enforcement mechanisms than code law countries (i.e., the rest of the EU), as found by Francis, Khurana and Pereira (2003) and Hope (2003), among others.…”

Section: Public and Private Information As A Basis For Analysing The mentioning

confidence: 99%

“…Without the existence of effective enforcement mechanisms, Barth et al (2008) conclude, the potential benefits of the introduction of IFRS are difficult to attain (cf. Byard et al, 2011;Preiato et al, 2013). The quality of the accounting standard previously used in a given country also appears as an important factor in explaining whether IFRS leads to an improvement in accounting quality.…”

Section: Public and Private Information As A Basis For Analysing The mentioning

confidence: 99%

See 4 more Smart Citations

An Empirical Study of the Method Effect in Analysing the Adoption of IFRS

Koch¹,

Nilsson²,

Jönsson³

et al. 2014

AFR

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This study investigates the consequences of using different methods when making conclusions about the effect of IFRS. The study's contribution is related to the suggestion that research design must be considered when analysing the results of prior studies on the adoption of IFRS. In summary, our results demonstrate that the impact of IFRS on accounting quality measured as financial analysts' information environment depends on the model used. Using the same model as in prior research (the BKLS model) our results confirm earlier studies that IFRS adoption improves the information environment for analysts. However, when using a more sophisticated model no such improvement can be found.

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Section: The Rationale Of Using Financial Analyst Performance As a Mesupporting

confidence: 80%

Section: Public and Private Information As A Basis For Analysing The mentioning

confidence: 99%

Section: Public and Private Information As A Basis For Analysing The mentioning

confidence: 99%

Section: Public and Private Information As A Basis For Analysing The mentioning

confidence: 99%

Section: Public and Private Information As A Basis For Analysing The mentioning

confidence: 99%

See 3 more Smart Citations

An Empirical Study of the Method Effect in Analysing the Adoption of IFRS

Koch¹,

Nilsson²,

Jönsson³

et al. 2014

AFR

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Choosing Valuation Models in the UAE

Aljifri

Ahmad

2019

Lecture Notes in Information Systems and Organisation

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Mandatory IFRS reporting and changes in enforcement

Christensen¹,

Hail²,

Leuz³

2013

Journal of Accounting and Economics

676

149

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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

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Mandatory Adoption of IFRS and Analysts’ Forecasts: How Much Does Enforcement Matter?

Cited by 26 publications

References 53 publications

An Empirical Study of the Method Effect in Analysing the Adoption of IFRS

An Empirical Study of the Method Effect in Analysing the Adoption of IFRS

Choosing Valuation Models in the UAE

Mandatory IFRS reporting and changes in enforcement

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