Abstract

http://ssrn.com/abstract=2172014
 
 

References (46)



 
 

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Mandatory Financial Reporting and Voluntary Disclosure: The Effect of Mandatory IFRS Adoption on Management Forecasts


Xi Li


Temple University - Fox School of Business and Management

Holly Yang


Singapore Management University - School of Accountancy

July 23, 2015

The Accounting Review, Forthcoming

Abstract:     
This study examines the effect of the mandatory adoption of International Financial Reporting Standards (IFRS) on voluntary disclosure. Using a difference-in-difference analysis, we document a significant increase in the likelihood and frequency of management earnings forecasts following mandatory IFRS adoption, consistent with the notion that IFRS adoption alters firms’ disclosure incentives in response to increased capital-market demand. We find the increase to be larger among firms domiciled in code-law countries, suggesting a catching-up effect among firms facing low disclosure incentives pre-adoption. We then propose and test three channels through which IFRS adoption could alter firms’ disclosure incentives: improved earnings quality, increased shareholder demand, and increased analyst demand. We find evidence consistent with all three channels.

Number of Pages in PDF File: 69

Keywords: Voluntary disclosure, IFRS, Management forecasts, Legal regime, Capital-market demand

JEL Classification: G14, G15, K22, M41


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Date posted: November 7, 2012 ; Last revised: July 24, 2015

Suggested Citation

Li, Xi and Yang, Holly, Mandatory Financial Reporting and Voluntary Disclosure: The Effect of Mandatory IFRS Adoption on Management Forecasts (July 23, 2015). The Accounting Review, Forthcoming. Available at SSRN: http://ssrn.com/abstract=2172014 or http://dx.doi.org/10.2139/ssrn.2172014

Contact Information

Xi Li (Contact Author)
Temple University - Fox School of Business and Management ( email )
Alter Hall 449
1801 Liacouras Walk
Philadelphia, PA 19122
United States
HOME PAGE: http://astro.temple.edu/~xili/

Holly Yang
Singapore Management University - School of Accountancy ( email )
60 Stamford Road
Singapore 178900
Singapore
HOME PAGE: http://sites.google.com/site/holly0417phd/

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