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The impact of IFRS adoption on the accuracy and dispersion of analysts' forecasts in the Brazilian stock market

Author

Listed:
  • Rafael C Gatsios

    (University of São Paulo)

  • Fabiano G Lima

    (University of São Paulo)

  • Vinícius M Magnani

    (University of São Paulo)

Abstract

This study aims to analyze the impact of adopting international accounting standards on the accuracy and dispersion of analysts' forecasts in the Brazilian stock market. Data were extracted from the Institutional Brokers Estimate System (IBES) database and reference forms of companies published on the Brazilian Securities and Exchange Commission's website for the period 2000–2015. The difference-in-differences methodology was used to compare the results of companies that voluntarily adopted the IFRS with those of companies that adopted the IFRS after the mandatory adoption period. The results suggest that mandatory IFRS adoption contributed to an increase in the accuracy of analysts' earnings forecasts for non-financial companies, while it did not significantly impact the dispersion of analysts' forecasts. These findings suggest that IFRS adoption contributed to an increase in the quality of analysts' earnings forecasts, providing investors with more security when utilizing this information for decision-making.

Suggested Citation

  • Rafael C Gatsios & Fabiano G Lima & Vinícius M Magnani, 2018. "The impact of IFRS adoption on the accuracy and dispersion of analysts' forecasts in the Brazilian stock market," Economics Bulletin, AccessEcon, vol. 38(4), pages 2389-2398.
    • Handle: RePEc:ebl:ecbull:eb-18-00869
    as

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    References listed on IDEAS

    as
    1. Holger Daske & Luzi Hail & Christian Leuz & Rodrigo Verdi, 2013. "Adopting a Label: Heterogeneity in the Economic Consequences Around IAS/IFRS Adoptions," Journal of Accounting Research, Wiley Blackwell, vol. 51(3), pages 495-547, June.
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    4. Ray Ball, 2006. "International Financial Reporting Standards (IFRS): pros and cons for investors," Accounting and Business Research, Taylor & Francis Journals, vol. 36(S1), pages 5-27.
    5. Gu, Zhaoyang & Wu, Joanna Shuang, 2003. "Earnings skewness and analyst forecast bias," Journal of Accounting and Economics, Elsevier, vol. 35(1), pages 5-29, April.
    6. Julie Cotter & Ann Tarca & Marvin Wee, 2012. "IFRS adoption and analysts’ earnings forecasts: Australian evidence," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 52(2), pages 395-419, June.
    7. Holger Daske & Luzi Hail & Christian Leuz & Rodrigo Verdi, 2008. "Mandatory IFRS Reporting around the World: Early Evidence on the Economic Consequences," Journal of Accounting Research, Wiley Blackwell, vol. 46(5), pages 1085-1142, December.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    analysts' forecast; IFRS; accuracy; dispersion.;
    All these keywords.

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G3 - Financial Economics - - Corporate Finance and Governance

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