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
Date Written: January 21, 2014
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: Suggested Citation