Publication Type
Journal Article
Version
Preprint
Publication Date
9-2013
Abstract
In October 2008, the International Accounting Standards Board amended IAS 39 to allow banks to retroactively reclassify financial assets that previously were measured at fair value to amortized cost. By reclassifying financial assets, a bank can potentially avoid recognizing the unrealized fair value losses and thereby increase its income and regulatory capital during a market downturn. We examine the implications of the reclassification decision by banks for the properties of financial analyst earnings forecasts during 2008–2009, when economic conditions were highly volatile. We find that the reclassification choice during the financial crisis reduced analyst forecast accuracy and increased forecast dispersion. We also find that the observed decline in analyst forecasting ability is limited to the year of adoption when the economic environment was highly volatile.
Discipline
Accounting | Portfolio and Security Analysis
Research Areas
Financial Performance Analysis
Publication
Journal of Accounting and Public Policy
Volume
32
Issue
5
First Page
342
Last Page
356
ISSN
0278-4254
Identifier
10.1016/j.jaccpubpol.2013.06.006
Publisher
Elsevier
Citation
LIM, Chee Yeow; LIM, Chu Yeong; and LOBO, Gerald J..
IAS 39 reclassification choice and analyst earnings forecast properties. (2013). Journal of Accounting and Public Policy. 32, (5), 342-356.
Available at: https://ink.library.smu.edu.sg/soa_research/948
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
http://doi.org/10.1016/j.jaccpubpol.2013.06.006