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Does IFRS experience improve analyst performance?
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DOI：10.1016/j.intaccaudtax.2021.100443.png)
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Abstract
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We examine the effect of analysts' task-specific experience with International Financial Reporting Standards (IFRS) on forecast accuracy, timeliness, and boldness in Europe. Our unique setting allows us to build on studies in the United States (US) that document how task-specific experience enhances analyst forecast accuracy. Specifically, the adoption of IFRS affected all analysts in the European Union, thereby allowing us to examine the impact of task-specific experience on a broad group of analysts possessing dissimilar abilities and attributes. We find that IFRS experience results in more accurate earnings forecasts, increased boldness of forecasts, and greater timeliness of forecasts. In addition, we document that the relationship between IFRS experience and forecast accuracy is most pronounced in countries with high investor participation in financial markets and large differences between domestic generally accepted accounting standards (GAAP) and IFRS. We interpret the results as consistent with the expectations of standard setters, such as the International Accounting Standards Board, that IFRS is valuable to external users as a predictive tool and of the US Securities and Exchange Commission that IFRS adoption would require analyst investments in education and training. (C) 2021 Elsevier Inc. All rights reserved.
Keywords:
Sell-side analysts
Forecast properties
IFRS experience
Journal
J
IF:
3.7
Papers:
242
Citations:
1.3K
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Cited Papers
Market reaction to and valuation of IFRS reconciliation adjustments: first evidence from the UK
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