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Analysts' Forecast Accuracy in Germany: The Effect of Different Accounting Principles and Changes of Accounting Principles

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Author Info

  • Jürgen Ernstberger

    ()
    (University of Regensburg)

  • Simon Krotter

    ()
    (Siemens AG München)

  • Christian Stadler

    ()
    (University of London)

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    Abstract

    This paper assesses the influence of an adoption of IAS/IFRS or US GAAP on the financial analysts’ forecast accuracy in a homogenous institutional framework. Our findings suggest that the forecast accuracy is higher for estimates based on IFRS or US GAAP data than for forecasts based on German GAAP data. Moreover, in the year of switching from German GAAP to US GAAP the forecast accuracy is lower than in other years. The paper contributes to prior research by providing evidence about the usefulness of international accounting data and about the adoption effects of a change to such accounting principles.

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    File URL: http://www.business-research.org/2008/1/accounting/1391/ernstberger.pdf
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    Bibliographic Info

    Article provided by German Academic Association for Business Research in its journal BuR - Business Research.

    Volume (Year): 1 (2008)
    Issue (Month): 1 (May)
    Pages: 26-53

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    Handle: RePEc:vhb:journl:v:1:y:2008:i:1:p:26-53

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    Related research

    Keywords: accounting; adoption effect; analysts; analysts’ forecast accuracy; financial analysts; German GAAP; Germany; HGB; IAS; IFRS; IFRS adoption; learning effect; US GAAP;

    References

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    1. Mitchell A. Petersen, 2005. "Estimating Standard Errors in Finance Panel Data Sets: Comparing Approaches," NBER Working Papers 11280, National Bureau of Economic Research, Inc.
    2. Degeorge, François & Patel, U & Zeckhauser, Richard, 1998. "Earnings Management to Exceed Thresholds," CEPR Discussion Papers 1790, C.E.P.R. Discussion Papers.
    3. Christian Leuz, 2003. "IAS Versus U.S. GAAP: Information Asymmetry-Based Evidence from Germany's New Market," Journal of Accounting Research, Wiley Blackwell, vol. 41(3), pages 445-472, 06.
    4. Robert E. Verrecchia & Christian Leuz, 1999. "The Economic Consequences of Increased Disclosure," Working Paper Series: Finance and Accounting 41, Department of Finance, Goethe University Frankfurt am Main.
    5. Siew Hong Teoh & Ivo Welch & T.J. Wong, 1998. "Earnings Management and the Long-Run Market Performance of Initial Public Offerings," Journal of Finance, American Finance Association, vol. 53(6), pages 1935-1974, December.
    6. Acker, D. & Horton, J. & Tonks, I., 2002. "Accounting standards and analysts' forecasts: the impact of FRS3 on analysts' ability to forecast EPS," Journal of Accounting and Public Policy, Elsevier, vol. 21(3), pages 193-217.
    7. Ding, Yuan & Hope, Ole-Kristian & Jeanjean, Thomas & Stolowy, Herve, 2007. "Differences between domestic accounting standards and IAS: Measurement, determinants and implications," Journal of Accounting and Public Policy, Elsevier, vol. 26(1), pages 1-38.
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    Cited by:
    1. Ahmed, Kamran & Chalmers, Keryn & Khlif, Hichem, 2013. "A Meta-analysis of IFRS Adoption Effects," The International Journal of Accounting, Elsevier, vol. 48(2), pages 173-217.
    2. Philip Brown, 2011. "International Financial Reporting Standards: what are the benefits?," Accounting and Business Research, Taylor & Francis Journals, vol. 41(3), pages 269-285, August.

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