Earnings Attributes and the Properties of Analysts’ Forecasts: A Comparison among Firms Reporting under US GAAP, IFRS and Non-US Local Standards

Document Type

Article

Publication Date

2012

Publication Title

International Journal of the Academic Business World

First Page

63

Last Page

80

Additional Publication URL

http://www.jwpress.com/IJABW/IJABW.htm

Abstract

The purpose of this paper is to explore the association between earnings attributes and the properties of analysts’ earnings forecasts for firms reporting under different accounting standards. Financial analysts are sophisticated market participants for whom firms’ historical financial statements are important inputs. For that reason, the association between the properties of analysts’ forecasts (accuracy and dispersion) and the attributes of earnings numbers (persistence, predictability and smoothness) might provide additional evidence on the value and informativeness of different accounting standards. My results show that the association between earnings attributes (especially predictability) and the accuracy and dispersion of analysts’ earnings forecasts is stronger for firms reporting under IFRS compared to firms reporting under US GAAP or other domestic accounting standards. In addition, these results are stronger for firms incorporated in countries with high levels of legal enforcement, which is consistent with previous findings on the impact of a country’s legal enforcements levels on the implementation of IFRS.

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Copyright © 2012 JW Press. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of the publisher.

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