Do Accounting Standards Matter to Financial Analysts? An Empirical Analysis of the Effect of Cross-listing from Different Accounting Standards Regimes on Analyst Following and Forecast Error.

Posted: 4 Mar 2008 Last revised: 1 Apr 2019

See all articles by Abed Al-Nasser Abdallah

Abed Al-Nasser Abdallah

American University of Sharjah

Wissam Abdallah

Lebanese American University

Ahmad Ismail

American University of Beirut

Date Written: February 29, 2008

Abstract

The paper explores whether the effects of cross-listing on analyst following and forecast error differ between firms with different accounting standards. The results reveal a higher increase in the number of analysts for cross-listed firms that follow their home country GAAPs prior cross-listing, and partially reconcile or fully switch to IAS/US GAAP/ or UK GAAP after cross-listing, compared to those which already adopt IAS or US GAAP prior to cross-listing. After controlling for raising capital, we find that firms that fully switch to IAS/US GAAP have a higher increase in analyst following after cross-listing compared to firms that partially reconcile to IAS/US GAAP. In addition, we find a higher increase in analyst following after cross-listing for firms from low-level accounting standards environments compared to firms from high-level accounting standards environments. Our results show evidence of an increase in the magnitude of analysts’ forecast errors after cross-listing for firms that follow home GAAP pre cross-listing but partially reconcile to IAS/US GAAP or UK GAAP. On the other hand, we report a decrease in the forecast error for firms that fully switch to IAS/US GAAP

Keywords: Cross-listing, information disclosure, accounting standards, analyst following, forecast error

JEL Classification: G14, G15, G18, G34

Suggested Citation

Abdallah, Abed Al-Nasser and Abdallah, Wissam and Ismail, Ahmad, Do Accounting Standards Matter to Financial Analysts? An Empirical Analysis of the Effect of Cross-listing from Different Accounting Standards Regimes on Analyst Following and Forecast Error. (February 29, 2008). International Journal of Accounting, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1101401

Abed Al-Nasser Abdallah

American University of Sharjah ( email )

United Arab Emirates
+971 6 515 2594 (Phone)

Wissam Abdallah (Contact Author)

Lebanese American University ( email )

P.O. Box 13-5053
Chouran Beirut 11022801
Beirut
Lebanon

HOME PAGE: http://sb.lau.edu.lb/faculty-research/faculty/fa/dr-wissam-abdallah-1.php

Ahmad Ismail

American University of Beirut ( email )

Bliss Street
Olayan School of Business
Beirut, POB 11236
Lebanon

HOME PAGE: http://www.aub.edu.lb/osb/publicprofile/Pages/profile.aspx?memberID=ai05

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
1,252
PlumX Metrics