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The impact of IFRS adoption on IPOs management earnings forecasts in Australia

Georgakopoulos, Georgios, Gounopoulos, Dimitrios, Huang, Chen, Patsika, Victoria (2022) The impact of IFRS adoption on IPOs management earnings forecasts in Australia. Journal of International Accounting, Auditing and Taxation, 48 . Article Number 100490. ISSN 1061-9518. (doi:10.1016/j.intaccaudtax.2022.100490) (Access to this publication is currently restricted. You may be able to access a copy if URLs are provided) (KAR id:92638)

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In this study, we investigate the accuracy of management earnings forecasts under International Financial Reporting Standards (IFRS) in the context of an initial public offering (IPO). We observe a decline in management forecast errors (FEs) in Australia following the mandatory implementation of IFRS in 2005. Further evidence suggests that IPO management earnings forecasts become more conservative in post-IFRS periods. We argue that IFRS enables investors to better evaluate IPO firms’ performance and demand higher returns from firms that report inflated and inaccurate earnings forecasts. We also show that over-optimistic earnings forecasts and larger forecasting errors result in greater underpricing under the IFRS regime. Overall, this study suggests that IFRS, as a set of highquality accounting standards, improved corporate disclosure quality and the information environment.

Item Type: Article
DOI/Identification number: 10.1016/j.intaccaudtax.2022.100490
Uncontrolled keywords: IFRS, IPOs, information environment, management earnings forecast accuracy, corporate disclosure
Subjects: H Social Sciences
Divisions: Divisions > Kent Business School - Division > Department of Accounting and Finance
Depositing User: Chen Huang
Date Deposited: 10 Jan 2022 16:09 UTC
Last Modified: 31 Aug 2022 13:32 UTC
Resource URI: (The current URI for this page, for reference purposes)

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Huang, Chen.

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