Voluntary IFRS Adoption, Analyst Coverage, and Information Quality: International Evidence

2012 ◽  
Vol 11 (1) ◽  
pp. 45-76 ◽  
Author(s):  
Jeong-Bon Kim ◽  
Haina Shi
Keyword(s):  
Financial Reporting ◽  
Private Information ◽  
Information Quality ◽  
Public Information ◽  
Public And Private ◽  
Analyst Coverage ◽  
Financial Reporting Standards ◽  
Common Information ◽  
Ifrs Adoption ◽  
Information Set

ABSTRACT This study investigates whether and how a firm's voluntary adoption of International Financial Reporting Standards (IFRS) affects financial analysts' decisions to follow the firm, and improves the information environment, as reflected in the precision of the analysts' information set. First, this study finds that firms with voluntary IFRS adoptions attract more analysts than non-adopter firms. Second, it finds that the added disclosure via IFRS adoption contributes to the better precision of the analyst information set. Third, this study finds that the improved precision of total analyst information is attributed to not only an increase in the precision of public information common to all analysts, but also an increase in the precision of private information that is idiosyncratic to a particular analyst. This finding suggests a complementary relation with respect to the effect of IFRS adoption on the quality of public and private information. Finally, further analysis reveals that analyst coverage also improves the precision of information. Specifically, this study provides evidence suggesting that voluntary IFRS adoption is associated with more precise public (common) information, while analyst coverage is associated with more precise private (idiosyncratic) information.

scholarly journals The Relation between Income Smoothing, Earnings Persistence and IFRS Adoption

2018 ◽  
Vol 16 (2) ◽  
pp. 251
Author(s):  
Ana Carolina Kolozsvari ◽  
Marcelo Alvaro Da Silva Macedo
Keyword(s):  
Time Series ◽  
Financial Reporting ◽  
Information Quality ◽  
Income Smoothing ◽  
Earnings Persistence ◽  
Reporting Standards ◽  
Financial Reporting Standards ◽  
Ifrs Adoption

This research approaches the influence of smoothing on persistence, two time-series properties of the same earnings stream, considering the adoption of International Financial Reporting Standards (IFRS), in Brazil. This influence is interesting from the possibility of the disclosure to inform stability to influence the information quality for valuation. The objective was to investigate whether the IFRS adoption modified the smoothing-persistence relation. We inserted dummies in autoregressive models, to identify the influence of smoothing on persistence regarding different accounting environments. The findings show that (i) the IFRS adoption increased the quality of earnings; (ii) the IFRS shifted the role of smoothing, that previously increased and then decreased the persistence; and (iii) the smoothing suppressed the benefits for information quality brought by IFRS adoption. We conclude that IFRS increased the informational level of earnings, evidencing that interferences to mitigate impacts on reported income ceased to increase and started to decrease its usefulness.

Market Reaction to the Adoption of IFRS in Europe

2010 ◽  
Vol 85 (1) ◽  
pp. 31-61 ◽  
Author(s):  
Christopher S. Armstrong ◽  
Mary E. Barth ◽  
Alan D. Jagolinzer ◽  
Edward J. Riedl
Keyword(s):  
Information Asymmetry ◽  
Positive Reaction ◽  
Financial Reporting ◽  
Information Quality ◽  
Reporting Standards ◽  
High Quality ◽  
Market Reactions ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Stock Market Reactions

ABSTRACT: This study examines European stock market reactions to 16 events associated with the adoption of International Financial Reporting Standards (IFRS) in Europe. European IFRS adoption represented a major milestone toward financial reporting convergence yet spurred controversy reaching the highest levels of government. We find an incrementally positive reaction for firms with lower quality pre-adoption information, which is more pronounced for banks, and with higher pre-adoption information asymmetry, consistent with investors expecting net information quality benefits from IFRS adoption. We find an incrementally negative reaction for firms domiciled in code law countries, consistent with investors' concerns over enforcement of IFRS in those countries. Finally, we find a positive reaction to IFRS adoption events for firms with high-quality pre-adoption information, consistent with investors expecting net convergence benefits from IFRS adoption.

scholarly journals Mandatory IFRS Adoption And Financial Analysts' Information Environment: Evidence From Korean Market

2016 ◽  
Vol 32 (5) ◽  
pp. 1387
Author(s):  
Saerona Kim ◽  
Noolee Kim ◽  
Kyoung-Min Kwon
Keyword(s):  
Financial Reporting ◽  
Financial Analysts ◽  
Forecast Accuracy ◽  
Information Environment ◽  
Analyst Coverage ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Information Sets ◽  
Mandatory Adoption ◽  
Korean Market

The paper examines the effects of the mandatory adoption of International Financial Reporting Standards (IFRS) on financial analysts’ information environment, specifically on analysts forecast accuracy in the Korean market. We find that financial analysts’ forecast accuracy improves after the mandatory IFRS adoption. We further investigate the source of observed accuracy enhancements and find that the improved forecast accuracy is attributable to the increased precision in analysts’ information sets for KOSPI firms and increased opportunity for earnings management for KOSDAQ firms. We also find that the analyst coverage in Korean market is reduced after mandatory IFRS adoption.

scholarly journals Main Consequences of IFRS Adoption: Analysis of Existing Literature and Suggestions for Further Research

2015 ◽  
Vol 26 (68) ◽  
pp. 126-139 ◽  
Author(s):  
Isabel Maria Estima Costa Lourenço ◽  
Manuel Emílio Mota de Almeida Delgado Castelo Branco
Keyword(s):  
Financial Reporting ◽  
Capital Market ◽  
Information Quality ◽  
General Rule ◽  
Management Incentives ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
The Social ◽  
Social Sciences Citation Index ◽  
Positive Effect

<p>This study characterizes the results of scientific research on the effect of adopting the International Financial Reporting Standards (IFRS) that have been published in the most prestigious scientific journals in the field of accounting at the international level and it identifies avenues for further research. Based on the analysis of a set of 67 articles published by the accounting journals that make up the Social Sciences Citation Index (SSCI), published between 2000 and 2013, it is concluded that, as a general rule, IFRS adoption has a positive effect on information quality, the capital market, analysts' ability to predict, comparability, and information use. Nevertheless, this effect depends on some factors, such as country's characteristics (namely, the enforcement level) and companies' characteristics. Sharing rules is not, by itself, enough to create a common business language, and management incentives and institutional factors play a major role in framing the characteristics of financial reporting. Finally, some gaps are identified in the literature and avenues for further research are introduced.</p>

Analyst Coverage and Audit Fees: International Evidence

2020 ◽  
pp. 0148558X2092824
Author(s):  
Youngdeok Lim ◽  
Gary S. Monroe
Keyword(s):  
Financial Reporting ◽  
Positive Impact ◽  
Audit Fees ◽  
Analyst Coverage ◽  
Financial Reporting Standards ◽  
Shareholder Protection ◽  
Ifrs Adoption ◽  
International Evidence ◽  
Country Level ◽  
International Setting

Using 41,648 firm-year observations from 30 countries during the period 2000–2011, we investigate the relation between analyst coverage and audit fees. We also examine whether the adoption of International Financial Reporting Standards (IFRS) and shareholder protection at the country level interacts with analyst coverage to affect audit fees. We find that auditors charge firms higher fees when the firms have greater analyst coverage. This supports our argument pertaining to analyst pressure. The positive impact of analyst coverage on audit fees is weaker for firms that adopt IFRS and in countries where there is high shareholder protection. This study enhances an understanding of the effect of analyst coverage on audit fees in relation to IFRS adoption and shareholder protection levels in an international setting.

scholarly journals Mandatory IFRS Adoption and Analyst Coverage: Evidence from the UK

2018 ◽  
Vol 12 (11) ◽  
pp. 435
Author(s):  
Mohammad Issa Almaharmeh ◽  
Hamzah Al-Mawali ◽  
Ghassan Obeidat
Keyword(s):  
Financial Reporting ◽  
Financial Analysts ◽  
Reporting Standards ◽  
Financial Analyst ◽  
Analyst Coverage ◽  
Listed Firms ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Mandatory Adoption ◽  
The Uk

This study investigates whether the mandatory adoption of International Financial Reporting Standards (IFRS) enforce financial analysts to cover the firms with their EPS forecast. After examining a large sample of 10,953 firm year observations from 1,467 distinct UK listed firms for the period between 1990 and 2013, the results suggest that, mandatory IFRS adoption attract more analysts to follow the firms. Where we find the number of financial analyst who cover the IFRS adopters is significantly higher than that for non-adopter firms.

scholarly journals IFRS Adoption Impact On Financial And Accounting Information Quality: An Exploratory Study On Moroccan Petroleum And Gas Sector

2016 ◽  
Vol 6 (1) ◽  
pp. 337
Author(s):  
Anass Cherti ◽  
Houria Zaam
Keyword(s):  
Financial Reporting ◽  
Information Quality ◽  
Academic Research ◽  
Accounting Information ◽  
Stock Exchanges ◽  
Financial Reporting Standards ◽  
Financial Variables ◽  
Ifrs Adoption ◽  
Accounting Information Quality ◽  
The Impact

<p class="ber"><span lang="EN-US">The balance of <em>International Financial Reporting Standards</em> (IFRS), after ten years of their implementation, has reflected a positive perception of its impacts on the function “finance and accounting” of companies and issuers. Those companies and issuers observe, in a large majority that the transition to IFRS has increased the quality and the homogeneity of the information produced and the rapidity of their establishment. Unfortunately in academic research, such studies remains not clear as most publications front IFRS adoption impact in general manner which concern all sectors at the same study.</span></p><p class="ber"><span lang="EN-US">The purpose of this article is to present the results of an empirical study of three petroleum and gas companies listed in the <em>Casablanca Stock Exchanges</em> (CSE), to measure the impact of the IFRS adoption on financial and accounting information quality in Moroccan petroleum and gas sector.</span></p><p class="ber"><span lang="EN-GB">The released results show that this impact is positive for the petroleum and gas sector and the majority of the accounting and financial variables of this sector under IFRS dependents on those variables under the General Standardization Code of Morocco (GSCM). </span></p>

scholarly journals An Investigation Of The Comparative Impact Of Degree Of Implementation Of IFRS Upon The Public And Private Information Quality Of Asia Pacific Country Firms

2010 ◽  
Vol 9 (3) ◽  
Author(s):  
Arsen Djatej ◽  
Grace Gao ◽  
Robert H.S. Sarikas ◽  
David L. Senteney
Keyword(s):  
Private Information ◽  
Information Quality ◽  
Public Information ◽  
Earnings Forecasts ◽  
Asia Pacific ◽  
Public And Private ◽  
Institutional Infrastructure ◽  
Asia Pacific Country ◽  
Equity Securities

This research investigates the comparative quality of public and private information environments between firms domiciled in 15 Asia Pacific countries of which seven are characterized as market supportive institutional infrastructure.  Our empirical analyses examine the comparative quality of public and private information components of equity securities analysts’ earnings forecasts for Asia Pacific firms, while controlling for firms cross-listing on U.S. equity securities exchanges and  country of domicile degree of implementation of IFRS.  Our results indicate that the quality of private information is higher for non-market supportive infrastructure countries, as compared to market-supportive infrastructure countries of domicile, and the quality of public information is higher for market-supportive infrastructure as compared to non-market-supportive infrastructure countries of domicile.  Furthermore, and particularly noteworthy, is that our results indicate that country of domicile degree of implementation of IFRS increases the quality of public information and decreases the quality of private information for both market-supportive infrastructure and non-market-supportive infrastructure countries of domicile, and also that the decrease in the quality of private and increase in the quality of public information associated with degree of implementation of IFRS are significantly more pronounced for market-supportive infrastructure countries relative to non-market-Supportive infrastructure countries of domicile.  We believe that our results suggest that IFRS is more beneficial for countries having market supportive institutional infrastructure in place as compared with those who do not.

scholarly journals Mandatory IFRS Adoption and Analyst Coverage: Evidence from the UK

2018 ◽  
Vol 12 (11) ◽  
pp. 416
Author(s):  
Mohammad Issa Almaharmeh ◽  
Hamzah Al-Mawali ◽  
Ghassan Obeidat
Keyword(s):  
Financial Reporting ◽  
Financial Analysts ◽  
Reporting Standards ◽  
Financial Analyst ◽  
Analyst Coverage ◽  
Listed Firms ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Mandatory Adoption ◽  
The Uk

This study investigates whether the mandatory adoption of International Financial Reporting Standards (IFRS) enforce financial analysts to cover the firms with their EPS forecast. After examining a large sample of 10,953 firm year observations from 1,467 distinct UK listed firms for the period between 1990 and 2013, the results suggest that, mandatory IFRS adoption attract more analysts to follow the firms. Where we find the number of financial analyst who cover the IFRS adopters is significantly higher than that for non-adopter firms.

Does Mandatory IFRS Adoption Affect the Credit Ratings of Foreign Firms Cross-Listed in the U.S.?

2013 ◽  
Vol 27 (3) ◽  
pp. 491-510 ◽  
Author(s):  
Ann Ling-Ching Chan ◽  
Audrey Wen-hsin Hsu ◽  
Edward Lee
Keyword(s):  
Financial Reporting ◽  
Information Quality ◽  
Credit Ratings ◽  
Foreign Firms ◽  
Information Costs ◽  
Listed Firms ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Legal Enforcement ◽  
The U.S

SYNOPSIS: We examine whether the mandatory adoption of International Financial Reporting Standards (IFRS) affects the credit ratings of foreign firms cross-listed in the U.S. Consistent with the influence of accounting information quality on credit ratings that is established in the literature, we find significantly higher credit ratings among these cross-listed firms after IFRS. Furthermore, this effect is more pronounced among those from countries where there is a greater difference between previous domestic standards and IFRS, and from countries that had weaker legal enforcement and investor protection before the transition. Our findings are consistent with IFRS improving the transparency and creditworthiness of foreign firms cross-listed in the U.S. by reducing their information costs and risk for U.S. investors. The evidence implies that IFRS adoption in their home country could benefit firms that are already cross-listed or are seeking to cross-list in the U.S. JEL Classifications: F30; G15; M41.

Sign in / Sign up

Export Citation Format

Share Document