Intangible Assets, IFRS, and Analysts’ Earnings Forecasts

Accounting and Finance, Forthcoming

39 Pages Posted: 10 Dec 2010 Last revised: 22 Sep 2011

See all articles by Keryn Chalmers

Keryn Chalmers

Monash University - Department of Accounting

Greg Clinch

Independent

Jayne M. Godfrey

University of Auckland

Zi Wei

Multiple version iconThere are 2 versions of this paper

Date Written: October 1, 2010

Abstract

We investigate whether the adoption of IFRS in 2005 by Australian firms has been associated with a loss of potentially useful information about intangible assets, as conjectured by Matolcsy and Wyatt (2006). We find that the negative association between analyst forecast error magnitude/dispersion and aggregate reported intangibles previously documented becomes stronger subsequent to IFRS adoption, primarily for firms with high levels of underlying intangible assets. This is contrary to Matolcsy and Wyatt (2006)’s conjecture. Our result is largely due to reported goodwill, rather than other intangible assets, suggesting that the impairment approach to goodwill valuation required by IFRS conveys more useful information than does the former straight-line amortisation approach. When we investigate a sub-sample of firms that report lower intangibles under IFRS than under the prior Australian GAAP, we do find evidence consistent with the Matolcsy and Wyatt (2006) conjecture.

Keywords: IFRS, Analysts Forecasts, Intangible Assets

JEL Classification: M40, M41

Suggested Citation

Chalmers, Keryn and Clinch, Greg and Godfrey, Jayne M. and Wei, Zi, Intangible Assets, IFRS, and Analysts’ Earnings Forecasts (October 1, 2010). Accounting and Finance, Forthcoming. Available at SSRN: https://ssrn.com/abstract=1722937

Keryn Chalmers

Monash University - Department of Accounting ( email )

900 Dandenong Road
Caulfield East, Victoria 3145
Australia
+61-3-9903-2867 (Phone)
+61-3-9903-2422 (Fax)

Greg Clinch (Contact Author)

Independent

No Address Available

Jayne M. Godfrey

University of Auckland ( email )

12 Grafton Road
Auckland, 1010
New Zealand

No contact information is available for Zi Wei

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