IFRS adoption and analysts' earnings forecasts: Australian evidence

Article

Cotter, Julie, Tarca, Ann and Wee, Marvin. 2012. "IFRS adoption and analysts' earnings forecasts: Australian evidence." Accounting and Finance. 52 (2), pp. 395-419. https://doi.org/10.1111/j.1467-629X.2010.00392.x
Article Title

IFRS adoption and analysts' earnings forecasts: Australian evidence

ERA Journal ID19059
Article CategoryArticle
AuthorsCotter, Julie (Author), Tarca, Ann (Author) and Wee, Marvin (Author)
Journal TitleAccounting and Finance
Journal Citation52 (2), pp. 395-419
Number of Pages25
Year2012
PublisherJohn Wiley & Sons
Place of PublicationMelbourne, Australia
ISSN0810-5391
1467-629X
Digital Object Identifier (DOI)https://doi.org/10.1111/j.1467-629X.2010.00392.x
Web Address (URL)http://onlinelibrary.wiley.com/doi/10.1111/j.1467-629X.2010.00392.x/pdf
Abstract

We study 145 large listed Australian firms to explore the impact of IFRS adoption on the properties of analysts’ forecasts and the role of firm disclosure about IFRS impact. We find that analyst forecast accuracy improves and there is no significant change in dispersion in the adoption year, suggesting that analysts coped effectively with transition to IFRS. However, we do not observe the expected relationship between firms’ IFRS impact disclosures in their financial statements issued at the end of the transition year with forecast error and dispersion in the adoption year. The results question the timeliness and usefulness of financial statement disclosure, even in a setting where disclosure was mandated by accounting standards (AASB 1047 and AASB 1) and firms had strong incentives to provide information to analysts.

KeywordsInternational Financial Reporting Standards (IFRS); analysts forecasts error and dispersion; AASB 1047 and AASB 101 IFRS transition disclosure
ANZSRC Field of Research 2020350103. Financial accounting
350208. Investment and risk management
350101. Accounting theory and standards
350104. International accounting
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Byline AffiliationsAustralian Centre for Sustainable Business and Development
University of Western Australia
Institution of OriginUniversity of Southern Queensland
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