The impact of IFRS on the analysts' information environment: the role of accounting policies and corporate disclosure

The thesis presents the results of a study on the impact of International Financial Reporting Standards on the analysts information environment. The analysis is concentrated on the role of specific IFRSs and corporate disclosure. The effect of IFRS adoption on the information asymmetry between firms and outsiders is examined through properties of analysts earnings forecasts. A contribution to the existing academic literature is made by examining the role of goodwill, intangible assets and acquisitions before and after IFRS adoption in Europe. The results show that the IFRSs for goodwill, acquisitions and intangible assets are related to improvements in the analysts information environment. Another contribution to knowledge is made by investigating the effect of corporate disclosure quantity on the analysts information environment before and after IFRS adoption. For this purpose, a new approach and text analysis technique to assess the impact of corporate disclosure quantity is developed. This involves the creation of a new custom dictionary and the collection of an extensive set of qualitative data. The results show that corporate disclosure quantity under IFRS, is related to improvements in the analysts information environment but that there are differences in this effect across European countries. The results also demonstrate that the improvements in the accuracy of analysts earnings forecasts are related particularly to disclosure concerning financial instruments and operating segments. Overall, the findings of the thesis suggest that the adoption of IFRS resulted in an increase in the quality of reported earnings, which is likely to derive from higher comparability of financial statements, enhanced transparency and an improved analysts information environment. It is also established that fundamental differences across countries remain after IFRS adoption and that the development and harmonisation of financial reporting standards alone are not sufficient to increase the quality of financial information and decrease information asymmetry between market participants

Accounting narratives and disclosure quality: Empirical evidence from the UK, France and Germany

In this paper, we analyse narrative disclosures from over 28,000 corporate announcements for 137 UK, French and German companies over the years 2003 to 2011. A custom-dictionary, based on software used by Kothari et al (2009) is employed to classify the disclosures into six categories based on theme and content, and the volume of disclosures in each category, in each month is recorded for each firm. The resulting variables are then used in models of disclosure quality based on the accuracy and dispersion of analysts’ earnings forecasts, to draw conclusions about the extent to which the quantity of disclosed information is related to disclosure quality. We also investigate the effects of the adoption of International Financial Reporting Standards (IFRS) by the firms during this period, differences between countries and the effect of various company specific factors including the level of intangible assets and goodwill in the firm’s balance sheet