Mandatory Financial Reporting and Voluntary Disclosure: Evidence from Mandatory IFRS Adoption
The Wharton School - Department of Accounting; Temple University - Fox School of Business and Management
Singapore Management University - School of Accountancy
February 18, 2014
This study examines the effect of mandatory adoption of International Financial Reporting Standards (IFRS) on voluntary disclosure. We document a significant increase in the likelihood and frequency of management earnings forecasts following IFRS adoption. Such increase comes from both forecast revisions and new issuances. We next propose and test three channels through which IFRS adoption leads to more voluntary disclosure: confirmatory role of mandatory reporting, higher investor demand for transparency, and heightened litigation risk. We document evidence consistent with the first two channels. Lastly, we examine the role of political influence and find that stakeholders, such as labor unions, equity markets, government, and lenders, all play a role in affecting the association between IFRS adoption and management forecasts.
Number of Pages in PDF File: 55
Keywords: Mandatory reporting, Voluntary disclosure, IFRS, Management forecasts, Political influence
JEL Classification: G14, G15, K22, M41
Date posted: November 7, 2012 ; Last revised: June 11, 2014
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