This research has benefited from the helpful comments of the editor Peter Clarkson, an anonymous reviewer, Millicent Chang, John Holland, H.Y. Izan and seminar participants at the Australian National University, Macquarie University, Monash University and the University of Queensland. We particularly acknowledge the assistance of Philip Brown and John Preiato in the preparation of this paper. We are grateful for the financial support of the Accounting and Finance Association of Australia and New Zealand (AFAANZ), UWA Business School and the University of Southern Queensland, and the data collection assistance provided by Wendy Hsu, Tasha Grieve, Dessalegn Mihret, Lalith Seelanatha and Anthony Vu.
IFRS adoption and analysts’ earnings forecasts: Australian evidence
Article first published online: 24 NOV 2010
© 2010 The Authors. Accounting and Finance © 2010 AFAANZ
Accounting & Finance
Volume 52, Issue 2, pages 395–419, June 2012
How to Cite
Cotter, J., Tarca, A. and Wee, M. (2012), IFRS adoption and analysts’ earnings forecasts: Australian evidence. Accounting & Finance, 52: 395–419. doi: 10.1111/j.1467-629X.2010.00392.x
- Issue published online: 19 APR 2012
- Article first published online: 24 NOV 2010
- Received 21 April 2010; accepted 25 October 2010 by Peter Clarkson (Deputy Editor).
- International financial reporting standards;
- Analysts’ forecasts error and dispersion;
- AASB 1047 and AASB 101 IFRS transition disclosure
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.