Impact of AIFRS on analyst forecast error : an accounting conservatism perspective

Chung, Zhongrong. (2008). Impact of AIFRS on analyst forecast error : an accounting conservatism perspective Honours Thesis, School of Business, University of Queensland.

       
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Author Chung, Zhongrong.
Thesis Title Impact of AIFRS on analyst forecast error : an accounting conservatism perspective
School, Centre or Institute School of Business
Institution University of Queensland
Publication date 2008
Thesis type Honours Thesis
Total pages 90
Language eng
Subjects 14 Economics
Formatted abstract
This thesis investigates the relationship between accounting conservatism and analyst forecast errors in Australia before and after the mandatory adoption of the International Financial Reporting Standards (AIFRS). It is motivated by the debate on the advantages and disadvantages of international accounting harmonization. Using different aspects of accounting conservatism, this study examines three research questions. Firstly, the relationship between accounting conservatism in Australian listed firms and analyst forecast errors is examined. Second, the level of conservatism in the financial reports of Australian firms is examined to see if IFRS induces firms to be more or less conservative. Lastly, the relationship between conservatism and forecast errors after the adoption of AIFRS is examined to see if it has changed. Results of the analysis show that there is a positive relationship between forecast errors and conservatism before AIFRS. However, in the periods after AIFRS adoption, there has been a reversal in the relationship such that there is a negative association between forecast errors and conservatism. Specifically, it is found that conservatism reduces the absolute value of forecast errors, indicating that conservatism in the post-AIFRS periods helps analysts to predict earnings more accurately. Sensitivity tests reveal that the findings are robust to alternative measures of conservatism.



 
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Created: Wed, 24 Nov 2010, 15:08:52 EST by Ning Jing on behalf of The University of Queensland Library