2011/07/06 by HONGPING TAN, Hongping Tan, SHIHENG WANG +3 · 107 citations
Business, Management and Accounting · Economics, Econometrics and Finance · #Accounting #Audit #Auditing, Earnings Management, Governance #Business #Comparability #Finance #Financial Markets and Investment Strategies #Financial Reporting and Valuation Research #Financial statement #Harmonization #International Financial Reporting Standards #Portfolio
paper · doi:10.1111/j.1475-679x.2011.00422.x
published in Journal of Accounting Research 49(5), 1307-1357 (Wiley)
openalex publication_date 2011/07/06 · openalex created_date 2025/10/10 · openalex updated_date 2026/06/11
This study investigates how accounting harmonization affects one particular group of financial statement users—financial analysts. We find that mandatory International Financial Reporting Standards (IFRS) adoption attracts foreign analysts, particularly those from countries that are simultaneously adopting IFRS along with the covered firm's country and those with prior IFRS experience. We also find that mandatory IFRS adoption improves foreign analysts’ forecast accuracy. The change in analyst following increases with the distance between prior local Generally Accepted Accounting Principles (GAAP) and IFRS and with the extent to which IFRS adoption eliminates GAAP differences between the firm's country and the analyst's country. IFRS adoption also attracts more local analysts, particularly those with prior IFRS experience and with an international portfolio prior to mandated IFRS adoption in their home country. Local analysts’ forecast accuracy is not affected by IFRS adoption. Overall, our results suggest that accounting harmonization brings comparability benefits that enhance the usefulness of accounting data.