IFRS Adoption and Analysts’ Earnings Forecasts: Australian Evidence

25 Pages Posted: 21 Apr 2012

See all articles by Julie Cotter

Julie Cotter

University of Southern Queensland

Ann Tarca

University of Western Australia

Marvin Wee

Australian National University (ANU); Financial Research Network (FIRN)

Date Written: June 2012

Abstract

We study 145 large listed Australian firms to explore the impact of international financial reporting standards (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.

Keywords: International financial reporting standards, Analysts’ forecasts error and dispersion, AASB 1047 and AASB 101 IFRS transition disclosure

JEL Classification: M41, G14

Suggested Citation

Cotter, Julie and Tarca, Ann and Wee, Marvin, IFRS Adoption and Analysts’ Earnings Forecasts: Australian Evidence (June 2012). Accounting & Finance, Vol. 52, Issue 2, pp. 395-419, 2012, Available at SSRN: https://ssrn.com/abstract=2042881 or http://dx.doi.org/10.1111/j.1467-629X.2010.00392.x

Julie Cotter (Contact Author)

University of Southern Queensland ( email )

Australian Centre for Sustainable Business and Dev
Toowoomba, 4350
Australia
+61 7 4631 2916 (Phone)
+61 7 4631 1770 (Fax)

HOME PAGE: http://www.usq.edu.au/users/cotter/

Ann Tarca

University of Western Australia ( email )

Business School
35 Stirling Highway
Crawley WA 6009
Australia
+61 8 6488 3868 (Phone)
+61 8 6488 1047 (Fax)

Marvin Wee

Australian National University (ANU) ( email )

The Australian National University
College of Business and Economics
Canberra, 2601
Australia
+61 2 61250416 (Phone)

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

HOME PAGE: http://www.firn.org.au

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