The Impact of Mandatory IFRS Adoption on Financial Analysts' Earnings Forecasts in Spain PDF Download
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Author: Pascual Garrido Miralles
Publisher:
ISBN:
Category :
Languages : en
Pages : 34
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Book Description
This study contributes to investigation into the benefits of mandatory adoption of International Financial Reporting Standards (IFRS) in regard to Spanish GAAP for analysts' earnings forecasts. In a sample of listed Spanish firms we find that mandatory IFRS adoption led to improvements in the quality of the information provided to financial analysts in the post-adoption period. We provide evidence that the benefits of IFRS take time to materialise. We also observe that the expected benefits and costs of IFRS adoption in relation to financial analysts' forecasts were not randomly distributed among Spanish firms. In terms of analysts' earnings forecast error and dispersion after implementation of IFRS, benefits are concentrated mainly in firms audited by the Big 4 audit firms.
Author: Pascual Garrido Miralles
Publisher:
ISBN:
Category :
Languages : en
Pages : 34
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Book Description
This study contributes to investigation into the benefits of mandatory adoption of International Financial Reporting Standards (IFRS) in regard to Spanish GAAP for analysts' earnings forecasts. In a sample of listed Spanish firms we find that mandatory IFRS adoption led to improvements in the quality of the information provided to financial analysts in the post-adoption period. We provide evidence that the benefits of IFRS take time to materialise. We also observe that the expected benefits and costs of IFRS adoption in relation to financial analysts' forecasts were not randomly distributed among Spanish firms. In terms of analysts' earnings forecast error and dispersion after implementation of IFRS, benefits are concentrated mainly in firms audited by the Big 4 audit firms.
Author: Matthias Demmer
Publisher:
ISBN:
Category :
Languages : en
Pages : 61
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Book Description
This study examines whether the improvement in analyst forecast accuracy around mandatory IFRS adoption is associated with the improvement in the accuracy of financial statement-based forecasts. We find significant out-of-sample improvement in financial statement-based forecast accuracy around mandatory IFRS adoption and significant improvement in analyst forecast accuracy only in countries that made concurrent improvements to financial reporting enforcement. We show that the improvement in analyst forecast accuracy is associated with the improvement in financial statement-based forecast accuracy around IFRS adoption. We also show that analyst forecasts, particularly for firms whose analysts forecast under favorable conditions (i.e., analysts who are less busy with more experience and resources), have a greater association with financial statement-based forecasts after mandatory IFRS adoption in countries with concurrent changes in enforcement. Furthermore, we document that analyst forecasts, particulary for firms whose analysts forecast under unfavorable conditions (i.e., analysts who are busier with less experience and resources), do not fully exploit the predictive ability of financial statements after IFRS adoption for firms in countries without concurrent changes in enforcement. Finally, we find that the analyst underreliance on financial-statement based forecasts is associated with year-ahead stock returns. These results are robust to controlling for disclosure quality and comparability. The findings are important for understanding the impact of mandatory IFRS adoption on the predictive ability of financial statements, and for understanding analysts' use of financial statements around mandatory IFRS adoption.
Author: Mohammad Nurunnabi
Publisher: Emerald Group Publishing
ISBN: 1801174423
Category : Business & Economics
Languages : en
Pages : 276
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Book Description
Contributions to International Accounting aims to address a vital gap in research by focusing on providing relevant and timely studies on International Financial Reporting Standards implementation for local and international policymakers.
Author: Li, Xi
Publisher:
ISBN:
Category :
Languages : en
Pages : 18
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Book Description
This study examines the effect of the mandatory adoption of International Financial Reporting Standards (IFRS) on voluntary disclosure. Using a difference-in-differences analysis, we document a significant increase in the likelihood and frequency of management earnings forecasts following mandatory IFRS adoption, consistent with the notion that IFRS adoption alters firms' disclosure incentives in response to increased capital-market demand. We find the increase to be larger among firms domiciled in code-law countries, suggesting a catching-up effect among firms facing low disclosure incentives pre-adoption. We then propose and test three channels through which IFRS adoption could alter firms' disclosure incentives: improved earnings quality, increased shareholder demand, and increased analyst demand. We find evidence consistent with all three channels.The paper "Mandatory Financial Reporting and Voluntary Disclosure: The Effect of Mandatory IFRS Adoption on Management Forecasts" may be found here: 'http://ssrn.com/abstract=2766981' http://ssrn.com/abstract=2766981.
Author: Li, Xi
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This study examines the effect of the mandatory adoption of International Financial Reporting Standards (IFRS) on voluntary disclosure. Using a difference-in-differences analysis, we document a significant increase in the likelihood and frequency of management earnings forecasts following mandatory IFRS adoption, consistent with the notion that IFRS adoption alters firms' disclosure incentives in response to increased capital-market demand. We find the increase to be larger among firms domiciled in code-law countries, suggesting a catching-up effect among firms facing low disclosure incentives pre-adoption. We then propose and test three channels through which IFRS adoption could alter firms' disclosure incentives: improved earnings quality, increased shareholder demand, and increased analyst demand. We find evidence consistent with all three channels.The appendix to "Mandatory Financial Reporting and Voluntary Disclosure: The Effect of Mandatory IFRS Adoption on Management Forecasts" may be found here: 'http://ssrn.com/abstract=2767001' http://ssrn.com/abstract=2767001.
Author: Christof Beuselinck
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
This study examines whether financial analysts' research structure and portfolio selection choices helped in improving relative earnings forecast accuracy around mandatory IFRS adoption in Europe. Using a sample of 68,665 one-year ahead forecasts for 1,980 publicly listed firms, we find that market-wide mandatory IFRS adoption in the European Union resulted in a significant improvement in the relative forecast accuracy of sector specialists compared to generalists, while country specialists retained a relative accuracy advantage independent of the period of study. Moreover, sector specialists outperformed generalists especially for firms with large local GAAP to IFRS income reconciliations in the first-time IFRS adoption year and when analysts' research portfolios prior to IFRS adoption exhibited high variability in local GAAP reporting practices. Additional analysis indicates that IFRS enabled analysts to initiate coverage of more firms, especially smaller ones, in their sector of specialization. Overall, our results are consistent with the notion that mandatory IFRS adoption in Europe reduced information processing costs and enlarged the within-industry valuation scope.
Author: Jennifer Francis
Publisher: Now Publishers Inc
ISBN: 1601981147
Category : Business & Economics
Languages : en
Pages : 97
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Book Description
This review lays out a research perspective on earnings quality. We provide an overview of alternative definitions and measures of earnings quality and a discussion of research design choices encountered in earnings quality research. Throughout, we focus on a capital markets setting, as opposed, for example, to a contracting or stewardship setting. Our reason for this choice stems from the view that the capital market uses of accounting information are fundamental, in the sense of providing a basis for other uses, such as stewardship. Because resource allocations are ex ante decisions while contracting/stewardship assessments are ex post evaluations of outcomes, evidence on whether, how and to what degree earnings quality influences capital market resource allocation decisions is fundamental to understanding why and how accounting matters to investors and others, including those charged with stewardship responsibilities. Demonstrating a link between earnings quality and, for example, the costs of equity and debt capital implies a basic economic role in capital allocation decisions for accounting information; this role has only recently been documented in the accounting literature. We focus on how the precision of financial information in capturing one or more underlying valuation-relevant constructs affects the assessment and use of that information by capital market participants. We emphasize that the choice of constructs to be measured is typically contextual. Our main focus is on the precision of earnings, which we view as a summary indicator of the overall quality of financial reporting. Our intent in discussing research that evaluates the capital market effects of earnings quality is both to stimulate further research in this area and to encourage research on related topics, including, for example, the role of earnings quality in contracting and stewardship.
Author: Ulf Brüggemann
Publisher: Springer Science & Business Media
ISBN: 3834969524
Category : Business & Economics
Languages : en
Pages : 162
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Book Description
Ulf Brüggemann discusses and empirically investigates the economic consequences of mandatory switch to IFRS. He provides evidence that cross-border investments by individual investors increased following the introduction of IFRS.
Author: Leonidas C. Doukakis
Publisher:
ISBN:
Category :
Languages : en
Pages : 46
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Book Description
This study examines the effect of mandatory adoption of International Financial Reporting Standards (IFRS) on both accrual-based and real earnings management. While prior literature has mainly examined the effects of IFRS adoption on accrual-based earnings management, no study to date has focused on the impact of IFRS adoption on real earnings management. Using a sample of 15,206 observations from 22 European countries between 2000 and 2010, this study employs a control sample of voluntary adopters and applies a differences-in-differences design to control for confounding concurrent events. The results suggest that mandatory IFRS adoption had no significant impact on either real or accrual-based earnings management practices. Additional analysis on a sub-sample of firms with relatively strong earnings management incentives supports a dominant role for firm-level reporting incentives over accounting standards in shaping financial reporting quality.
Author: Noor Houqe
Publisher:
ISBN:
Category :
Languages : en
Pages : 40
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Book Description
This study examines the effect of mandatory IFRS adoption on earnings quality in countries which exhibit high financial secrecy. Earnings quality is proxied by signed abnormal accruals and earnings conservatism. Using 19,324 firm-years from 14 countries over the period 1998-2011, we find that firms in a high-secrecy country tend to report higher abnormal accruals and earnings conservatism, which results in lower earnings quality. On the other hand, we find that mandatory IFRS adoption improves earnings quality by decreasing abnormal accruals and earnings conservatism. Our study provides evidence of the interaction between national culture, as indicated by secrecy, and IFRS adoption and helps to explain differences in earnings quality across different jurisdictions following IFRS adoption.
