| Proponents of global harmonization of accounting standards argue that providers of capital will be better able to identify efficient and productive companies internationally if they can compare the financial results of those companies. In order to bring about international harmonization, the International Accounting Standards Board has endeavored since its inception to create a set of high-quality, internationally accepted accounting standards that could be used by multinational issuers in cross-border offerings and listings of securities. The objective of International Accounting Standards (IAS) is to provide information that is comparable, informative, and useful to present and potential investors across countries in making rational investment decisions.; The objectives of this study are twofold. First, the study assesses the impact of firm compliance with the disclosure requirements of IAS on the characteristics of analysts' earnings forecasts (Phase I). Second, the study examines the impact of specific factors that influence compliance with the disclosure requirements of IAS (Phase II). Phase I of the study seeks to determine the usefulness of JAS disclosures by examining the association between compliance with the disclosure requirements of IAS and two characteristics of analysts' earnings forecasts, namely, forecast accuracy and forecast dispersion. The use of IAS entails for most firms a commitment to an increased level of financial disclosure. Applying IAS without full compliance results in less financial disclosure and therefore may adversely affect the financial forecasting process. On the other hand, full compliance with the disclosure requirements of IAS provides more information to financial analysts and may enhance their ability to provide more accurate forecasts. Compliance with the disclosure requirements of IAS may also affect forecast dispersion, or the standard deviation of financial analysts' forecasts, since higher forecast dispersion may serve as a proxy for uncertainty and low consensus among analysts about future earnings. (Abstract shortened by UMI.)... |
