How Would the Differences between IFRS and U.S. GAAP Affect U.S. Analyst Performance?

J. Account. Public Policy 34 (2015) 28–51

Posted: 8 Feb 2016

See all articles by Ran Barniv

Ran Barniv

Kent State University - Department of Accounting

Mark Myring

Ball State University - Department of Accounting

Date Written: February 5, 2016

Abstract

We examine whether differences between IFRS and U.S. GAAP affect forecast accuracy and other measures of analysts’ performance and if analysts with superior forecasting ability are less affected by these differences. Our unique sample consists of resided U.S. analysts who followed cross-listed firms in the U.S. and were unfamiliar with IFRS prior to its adoption but were familiar with U.S. GAAP. The main finding is that firm-specific differences between IFRS and U.S. GAAP and its interaction with our superior analyst variable and other information environment characteristics significantly affect forecast accuracy in the year of IFRS adoption, but this is generally not the case in the subsequent year. We provide evidence that superior analysts gain a comparative advantage in the year of IFRS adoption but the advantage fades out in subsequent years when all analysts are trained and educated in IFRS. Similar effects are generally documented on analysts following and stock recommendations but we find no significant effects on forecast dispersion. We interpret our findings as being consistent with U.S. regulators stating that U.S. analysts will need investments in education, training, and processing the interactive IFRS data and practitioners’ predictions that analysts would quickly learn the new accounting standards.

Keywords: IFRS, U.S. GAAP, Analyst Performance, Superior Analysts

JEL Classification: M41

Suggested Citation

Barniv, Ran and Myring, Mark, How Would the Differences between IFRS and U.S. GAAP Affect U.S. Analyst Performance? (February 5, 2016). J. Account. Public Policy 34 (2015) 28–51, Available at SSRN: https://ssrn.com/abstract=2728522

Ran Barniv (Contact Author)

Kent State University - Department of Accounting ( email )

P.O. Box 5190
Kent, OH 44242-0001
United States
330-672-1112 (Phone)
330-672-2548 (Fax)

Mark Myring

Ball State University - Department of Accounting ( email )

2000 W. University Ave.
Muncie, IN 47306
United States

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