Does Mandatory IFRS Adoption Improve the Information Environment?

Does Mandatory IFRS Adoption Improve the Information Environment?

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Does Mandatory IFRS Adoption Improve the Information Environment?

dc.contributor.author	Horton, Joanne
dc.contributor.author	Serafeim, Georgios
dc.contributor.author	Serafeim, Ioanna
dc.date.accessioned	2012-11-09T15:32:04Z
dc.date.issued	2012-11-09
dc.identifier.citation	Horton, Joanne, George Serafeim, and Ioanna Serafeim. "Does Mandatory IFRS Adoption Improve the Information Environment?" Contemporary Accounting Research (forthcoming).	en_US
dc.identifier.issn	0823-9150	en_US
dc.identifier.uri	http://nrs.harvard.edu/urn-3:HUL.InstRepos:9887632
dc.description.abstract	More than 120 countries require or permit the use of International Financial Reporting Standards (‘IFRS’) by publicly listed companies on the basis of higher information quality and accounting comparability from IFRS application. However, the empirical evidence about these presumed benefits are often conflicting and fail to separate between information quality and comparability. In this paper we examine the effect of mandatory IFRS adoption on firms’ information environment. We find that after mandatory IFRS adoption consensus forecast errors decrease for firms that mandatorily adopt IFRS relative to forecast errors of other firms. We also find decreasing forecast errors for voluntary adopters, but this effect is smaller and not robust. Moreover, we show that the magnitude of the forecast errors decrease is associated with the firm-specific differences between local GAAP and IFRS. This finding suggests that it is IFRS adoption rather than a correlated unobservable factor that is causing forecast errors to decrease. Exploiting individual analyst level data and isolating settings where analysts would benefit more from either increased comparability or higher quality information, we document that the improvement in the information environment is driven both by information and comparability effects. These results suggest that mandatory IFRS adoption has improved the quality of information intermediation in capital markets and as a result firms’ information environment by increasing both information quality and accounting comparability.	en_US
dc.language.iso	en_US	en_US
dc.relation.hasversion	http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1264101	en_US
dash.license	OAP
dc.subject	international accounting	en_US
dc.subject	financial reporting	en_US
dc.subject	standards	en_US
dc.subject	information	en_US
dc.subject	quality	en_US
dc.subject	earnings management	en_US
dc.title	Does Mandatory IFRS Adoption Improve the Information Environment?	en_US
dc.type	Journal Article	en_US
dc.description.version	Author's Original	en_US
dc.relation.journal	Contemporary Accounting Research	en_US
dash.depositing.author	Serafeim, Georgios
dc.date.available	2012-11-09T15:32:04Z