Publication Type

Journal Article

Publication Date

5-2016

Abstract

This study examines the effect of the mandatory adoption of International Financial Reporting Standards (IFRS) on voluntary disclosure. Using a difference-in-difference 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.

Keywords

voluntary disclosure, IFRS, management forecasts, legal regime, capital-market demand

Discipline

Accounting | Corporate Finance

Research Areas

Financial Intermediation and Information

Publication

Accounting Review

Volume

91

Issue

3

First Page

933

Last Page

653

ISSN

0001-4826

Identifier

10.2308/accr-51296

Publisher

American Accounting Association

Copyright Owner and License

Authors

Creative Commons License

Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License
This work is licensed under a Creative Commons Attribution-Noncommercial-No Derivative Works 4.0 License.

Additional URL

http://doi.org/10.2308/accr-51296

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