Hellenic Open University Conferences, International Conference on Business & Economics of the Hellenic Open University 2015

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ACCURACY OF FORECASTING EARNINGS, AFTER THE CHANGE IN ACCOUNTING STANDARDS
Stergios Athianos, Augustinos I. Dimitras

Building: Titania
Room: Platon
Date: 2015-02-07 02:00 PM – 03:45 PM
Last modified: 2015-01-27

Abstract


The adoption of the new accounting system results in a number of changes in almost any financial issue that a company has to manage with. The main scope of this paper is to examine whether the adoption of IAS’s/IFRS’s by the Greek listed companies affect the accuracy of the predictability of corporate earnings.

More specifically we investigate whether the variation in accounting standards relative to International Accounting Standards (IAS) has an impact on the ability of financial analysts to forecast corporate earnings accurately, and second whether analyst forecast accuracy changes after firms adopt IAS’s/IFRS’s.

As IAS’s / IFRS’s are accounting standards that requires increased disclosure and restrict management's choices of measurement methods relative to the accounting standards, we find that the lower of disclosures level the greater the forecast errors in predictability of earnings. On the contrary, the adoption of IAS’s/IFRS’s improves forecast accuracy of corporate earnings. Finally, the convergence of accounting policies and practices, reduce the forecast errors of financial analyst’s.


Keywords


Earnings Predictability, Forecasting, IAS/IFRS Accounting Oilicies