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The impact of IFRS 8 on financial analysts’ earnings forecast errors: EU evidence

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  • Aboud, Ahmed
  • Roberts, Clare
  • Mansour Zalata, Alaa

Abstract

While the IASB has eliminated virtually all differences between US GAAP and IFRS with respect to segment reporting, the quality of segment disclosure after IFRS 8 remains questionable, with the European Parliament only endorsing IFRS 8 after considerable scrutiny and debate. We investigate the impact of segment information quality and quantity on analysts’ earnings forecasts after the adoption of IFRS 8. We further address how country-level enforcement influences this relationship using a sample from EU countries. Findings reveal that the quality and quantity of segment information are associated with more accurate earnings forecasts following IFRS 8. Furthermore, the results suggest that enforcement plays a pivotal role in shaping the impact of the principles-based IFRS 8. These findings contribute to the ongoing debate on the quality of segment information under the management approach and the role of accounting regulation enforcement. They also provide early evidence on the usefulness of country-by-country reporting.

Suggested Citation

  • Aboud, Ahmed & Roberts, Clare & Mansour Zalata, Alaa, 2018. "The impact of IFRS 8 on financial analysts’ earnings forecast errors: EU evidence," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 33(C), pages 2-17.
    • Handle: RePEc:eee:jiaata:v:33:y:2018:i:c:p:2-17
    DOI: 10.1016/j.intaccaudtax.2018.08.001
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    8. Kang, Helen & Gray, Sidney J., 2019. "Country-specific risks and geographic disclosure aggregation: Voluntary disclosure behaviour by British multinationals," The British Accounting Review, Elsevier, vol. 51(3), pages 259-276.
    9. Barniv, Ran R. & Myring, Mark & Westfall, Tiffany, 2022. "Does IFRS experience improve analyst performance?," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 46(C).

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