Mandatory financial reporting and voluntary disclosure: the effect of mandatory IFRS adoption on management forecasts

Li, Xi ORCID: 0000-0002-9870-9661 and Yang, Holly (2016) Mandatory financial reporting and voluntary disclosure: the effect of mandatory IFRS adoption on management forecasts. Accounting Review, 91 (3). 933 - 953. ISSN 0001-4826

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Abstract

This study examines the effect of the mandatory adoption of International Financial Reporting Standards (IFRS) on voluntary disclosure. Using a difference-in-differences analysis, we document a significant increase in the likelihood and frequency of management earnings forecasts following mandatory IFRS adoption, consistent with the notion that IFRS adoption alters firms' disclosure incentives in response to increased capital-market demand. We find the increase to be larger among firms domiciled in code-law countries, suggesting a catching-up effect among firms facing low disclosure incentives pre-adoption. We then propose and test three channels through which IFRS adoption could alter firms' disclosure incentives: improved earnings quality, increased shareholder demand, and increased analyst demand. We find evidence consistent with all three channels.

Item Type:	Article
Official URL:	https://meridian.allenpress.com/accounting-review
Additional Information:	© 2016 The Authors
Divisions:	Accounting
Subjects:	H Social Sciences > HF Commerce > HF5601 Accounting H Social Sciences > HG Finance
Date Deposited:	05 Dec 2017 14:01
Last Modified:	03 Oct 2024 17:06
URI:	http://eprints.lse.ac.uk/id/eprint/85964

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