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Does IFRS Adoption Improve Analysts’ Earnings Forecasts? Evidence from Saudi Arabia

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  • Taoufik Elkemali

    (Accounting Department, School of Business, King Faisal University, Al-Ahsa 31982, Saudi Arabia)

Abstract

This study explores how IFRS adoption is associated with analysts’ forecast accuracy, optimism, and dispersion in Saudi Arabia. Drawing on data from publicly listed firms from 2013 to 2020, we assess changes in forecasting behavior surrounding the IFRS transition, accounting for firm-specific and macroeconomic factors. We argue that IFRS is expected to support more transparent financial statements, reduce risk and uncertainty, and offer a standardized and detailed reporting framework that influences analysts’ predictive performance. The findings reveal more accurate forecasts and a decline in both optimism and dispersion following IFRS adoption, suggesting enhanced financial reporting quality and reduced uncertainty. These associations underscore IFRS’s potential role in refining analysts’ earnings predictions and promoting stock market transparency.

Suggested Citation

  • Taoufik Elkemali, 2025. "Does IFRS Adoption Improve Analysts’ Earnings Forecasts? Evidence from Saudi Arabia," Risks, MDPI, vol. 13(8), pages 1-19, August.
    • Handle: RePEc:gam:jrisks:v:13:y:2025:i:8:p:152-:d:1724540
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    References listed on IDEAS

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    1. Hyun Duk Lee & Frederick Dongchuhl Oh & Junghum Park, 2022. "The impact of mandatory K‐IFRS adoption on IPO underpricing," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 27(1), pages 1101-1119, January.
    2. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    3. Issam Tlemsani & Mohamed Ashmel Mohamed Hashim & Robin Matthews, 2023. "The impact of IFRS adoption on Saudi Arabia," Journal of Islamic Accounting and Business Research, Emerald Group Publishing Limited, vol. 15(3), pages 519-533, April.
    4. Muhammad Shahin Miah & Haiyan Jiang & Asheq Rahman & Warwick Stent, 2023. "The impact of IFRS complexity on analyst forecast properties: The moderating role of high quality audit," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(1), pages 902-928, January.
    5. Nurunnabi, Mohammad & Donker, Han & Jermakowicz, Eva K., 2022. "The impact of mandatory adoption of IFRS in Saudi Arabia," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 49(C).
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