An Investigation Of The Impact Of Degree Of IFRS Implementation On The Comparative Accuracy And Bias Of Equity Securities Analysts East And West European Firms Earnings Forecasts

Abstract

This research investigates the comparative impact of country specific degree of IFRS implementation upon the accuracy and bias of West European and East European firms equity securities analysts earnings forecasts for 29 European countries 12 of which are characterized as being East European.  We utilize measures of equity securities analysts earnings forecast accuracy and bias in making comparisons of the impact of country specific degree of IFRS implementation upon the statistical properties of earnings forecasts for firms having domiciles in East European and West European countries.  Our results indicate that (1) analysts earnings forecast accuracy and earning forecast bias decreases in the sense that their association with magnitudes earnings changes decreases in relation with country specific degree of implementation of IFRS and (2) the degree of reduction in analysts earnings forecast accuracy and bias is statistically more pronounced for East European firms than for West European Firms.  Our results persist after controlling for cross-listing of ADRs on US securities exchanges.   Bases upon this evidence we conclude that the benefits of implementation of IFRS is marginally greater for East European firms that for West European firms.