International GAAP Differences: The Impact on Foreign Analysts
40 Pages Posted: 4 Dec 2007
There are 2 versions of this paper
International GAAP Differences: The Impact on Foreign Analysts
International Gaap Differences - the Impact on Foreign Analysts
Abstract
This paper investigates the relation between differences in accounting standards across countries and foreign analyst following and forecast accuracy. We develop two measures of differences in generally accepted accounting principles (GAAP) for 1,176 country-pairs. We then examine the impact of these measures of accounting differences on foreign analysts. In so doing, we utilize a unique database that identifies the location of financial analysts around the world, creating a sample that covers 6,888 foreign analysts making a total of 43,968 forecasts for 6,169 firms from 49 countries during 1998 - 2004. We find that the extent to which GAAP differs between two countries is negatively related to both foreign analyst following and forecast accuracy. Our results suggest that GAAP differences are associated with economic costs for financial analysts.
Keywords: GAAP differences, accounting standard, analyst following, forecast accuracy, harmonization
JEL Classification: M41, M44, M47, G29
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
International Accounting Standards and Accounting Quality
By Mary E. Barth, Wayne R. Landsman, ...
-
Mandatory IFRS Reporting Around the World: Early Evidence on the Economic Consequences
By Holger Daske, Luzi Hail, ...
-
International Financial Reporting Standards (IFRS): Pros and Cons for Investors
By Ray Ball
-
Financial Statement Effects of Adopting International Accounting Standards: the Case of Germany
By Mingyi Hung and K.r. Subramanyam
-
Market Reaction to the Adoption of IFRS in Europe
By Chris Armstrong, Mary E. Barth, ...
-
Market Reaction to the Adoption of IFRS in Europe
By Chris Armstrong, Mary E. Barth, ...
-
By Vicentiu Covrig, Mark L. Defond, ...
-
Adopting a Label: Heterogeneity in the Economic Consequences Around IAS/IFRS Adoptions
By Holger Daske, Luzi Hail, ...