Intangible Assets, IFRS and Analysts’ Earnings Forecasts

31 Pages Posted: 9 Sep 2012

See all articles by Keryn Chalmers

Keryn Chalmers

Monash University - Department of Accounting

Greg Clinch

Independent

Jayne M. Godfrey

University of Auckland

Zi Wei

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: September 2012

Abstract

We investigate whether the adoption of International Financial Reporting Standards (IFRS) in 2005 by Australian firms has been associated with a loss of potentially useful information about intangible assets. We find that the negative association between the accuracy and dispersion of analysts’ earnings forecasts and aggregate reported intangibles previously documented by Matolcsy and Wyatt (2006) becomes stronger subsequent to IFRS adoption, primarily for firms with high levels of underlying intangible assets. Our result is largely attributable 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 amortization approach. When we investigate a sub‐sample of firms that report lower intangibles under IFRS than under the prior Australian GAAP, we do find some evidence consistent with a loss of useful information relating to intangibles.

Keywords: Analysts’ forecasts, International financial reporting standards, 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 (September 2012). Accounting & Finance, Vol. 52, Issue 3, pp. 691-721, 2012. Available at SSRN: https://ssrn.com/abstract=2143534 or http://dx.doi.org/10.1111/j.1467-629X.2011.00424.x

Keryn Chalmers (Contact Author)

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

Independent

No Address Available

Jayne M. Godfrey

University of Auckland ( email )

12 Grafton Road
Auckland, 1010
New Zealand

Zi Wei

affiliation not provided to SSRN

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