Does IFRS Adoption Increase the Accuracy of Chinese Analysts’ Forecasts?

Fangfei Ding, Wenting Luo, Xiaolin Hao and Lei Zhang

Emerging Markets Finance and Trade, 2017, vol. 53, issue 5, 1107-1121

Abstract: This article investigates the impact of International Financial Reporting Standards (IFRS) adoption on the accuracy of Chinese analysts’ earnings forecasts. We find that after IFRS adoption, the accuracy of Chinese analysts’ forecasts decreases rather than increasing as they do in developed countries documented by the extant literature. Further investigation finds that this decrease is associated with a fair value measurement of financial assets held for trading. Our finding provides empirical evidence supporting the argument that the effectiveness of IFRS adoption could be negative in a developing country depending on its setting and fair value measurement brought about by IFRS could contribute to the negative effect in this setting.

Date: 2017
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DOI: 10.1080/1540496X.2016.1276826

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