The Impact of Mandatory IFRS Adoption on Financial Analysts’ Earnings Forecasts in Spain

Revista Española de Financiación y Contabilidad/Spanish Journal of Finance and Accounting, Forthcoming

34 Pages Posted: 26 Jan 2014

See all articles by Pascual Garrido Miralles

Pascual Garrido Miralles

University of Alicante-Finance & Accounting

Sonia Sanabria

Universidad de Alicante-Dpto. Economía Financiera

Date Written: January 21, 2014

Abstract

This study contributes to investigation into the benefits of mandatory adoption of International Financial Reporting Standards (IFRS) in regard to Spanish GAAP for analysts’ earnings forecasts. In a sample of listed Spanish firms we find that mandatory IFRS adoption led to improvements in the quality of the information provided to financial analysts in the post-adoption period. We provide evidence that the benefits of IFRS take time to materialise. We also observe that the expected benefits and costs of IFRS adoption in relation to financial analysts’ forecasts were not randomly distributed among Spanish firms. In terms of analysts’ earnings forecast error and dispersion after implementation of IFRS, benefits are concentrated mainly in firms audited by the Big 4 audit firms.

Keywords: Analysts’ earnings forecast error and dispersion; Mandatory International Financial Reporting Standards; Spanish GAAP; Big 4 audits

JEL Classification: M41, M49

Suggested Citation

Garrido Miralles, Pascual and Sanabria, Sonia, The Impact of Mandatory IFRS Adoption on Financial Analysts’ Earnings Forecasts in Spain (January 21, 2014). Revista Española de Financiación y Contabilidad/Spanish Journal of Finance and Accounting, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2383347

Pascual Garrido Miralles (Contact Author)

University of Alicante-Finance & Accounting ( email )

Campus de San Vicente
Carretera San Vicente del Raspeig
San Vicente del Raspeig, Alicante 03690
Spain

Sonia Sanabria

Universidad de Alicante-Dpto. Economía Financiera ( email )

Ctra. S. Vicente s/n
Alicante 03690
Spain

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