Publication Type
Journal Article
Version
acceptedVersion
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
953
ISSN
0001-4826
Identifier
10.2308/accr-51296
Publisher
American Accounting Association
Citation
LI, Xi and YANG, Holly I..
Mandatory Financial Reporting and Voluntary Disclosure: The Effect of Mandatory IFRS Adoption on Management Forecasts. (2016). Accounting Review. 91, (3), 933-953.
Available at: https://ink.library.smu.edu.sg/soa_research/1458
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.
Additional URL
https://doi.org/10.2308/accr-51296