Board characteristics, IFRS adoption and voluntary disclosure: evidence from management forecasts accuracy in France

In this article, we examine whether the IFRS adoption and the strong corporate board contribute effectively to reduce the information asymmetry by enhancing the quality of voluntary disclosure in the case of French IPOs. Our measure of disclosure quality is denoted by the absolute forecast error as a proxy for management earnings forecasts accuracy. We find evidence that the adoption of IFRS gives a credible signal of higher disclosure quality and lower information asymmetry through the improvement of the management earnings forecasts accuracy. Also, we find that the independent and larger boards do play an important role in promoting corporate transparency by conveying more accurate earnings forecasts. These findings suggest that future shareholders can benefit from receiving better forecasts. Accurate management forecasts can allow them to identify the companies they want to invest in, and to reduce the costs of adverse selection that they have to face.