Stock market synchronicity – An alternative approach to assessing the information impact of Australian IFRS

Bissessur, Sanjay and Hodgson, Allan (2012) Stock market synchronicity – An alternative approach to assessing the information impact of Australian IFRS. Accounting and Finance, 52 1: 187-212. doi:10.1111/j.1467-629X.2010.00388.x


Author Bissessur, Sanjay
Hodgson, Allan
Title Stock market synchronicity – An alternative approach to assessing the information impact of Australian IFRS
Journal name Accounting and Finance   Check publisher's open access policy
ISSN 0810-5391
1467-629X
Publication date 2012-03
Year available 2010
Sub-type Article (original research)
DOI 10.1111/j.1467-629X.2010.00388.x
Volume 52
Issue 1
Start page 187
End page 212
Total pages 26
Editor David Allen
Place of publication Richmond, Vic., Australia
Publisher Wiley-Blackwell Publishing Asia
Collection year 2011
Language eng
Formatted abstract
How has the mandatory adoption in 2005 of International Financial Reporting Standards in (IFRS) affected information flow for investors in Australia? This paper investigates impact by examining synchronicity issues. Morck et al. (2000) label the degree to which stock prices depend upon market and industry wide information as market synchronicity, and the degree to which they reflect firm specific information as idiosyncratic dependency. Increased synchronicity can signal several events, including a loss of confidence in firm specific accounting data, reduced transparency, or evidence of a greater degree of cross sectional comparability. We develop and test three theoretical models on the impact of IFRS and find a general decrease in synchronicity in the first two post-IFRS years, followed by a reversion to a significantly higher level in later years. Further tests reveal lower analyst forecast earnings errors post-IFRS. Results provide restrictive support for the International Accounting Standards Board contention that IFRS accounting provides higher specific and comparable information content – at least for sophisticated financial analysts.
© 2010 The Authors. Accounting and Finance © 2010 AFAANZ.
Keyword Market synchronicity
IFRS information flow
Comparable accounting information
G12
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ
Additional Notes Article first published online: 15 NOV 2010. Special Issue: Global Financial Crisis.

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2011 Collection
UQ Business School Publications
 
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Citation counts: TR Web of Science Citation Count  Cited 4 times in Thomson Reuters Web of Science Article | Citations
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Created: Mon, 14 Feb 2011, 11:52:11 EST by Karen Morgan on behalf of UQ Business School