Mandatory adoption of IFRS in Latin America: a boon or a bias

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Authors

Abstract

Exploiting the unique feature that Latin American countries have not undergone a significant change to the enforcement of accounting standards and investor protection mechanisms, we investigate whether mandatory adoption of IFRS and firm-level reporting incentives improve analysts’ information environment in Latin American countries (Argentina, Brazil, Chile, Mexico and Peru), and whether the precision of public, private and consensus information improve after IFRS adoption. Test results show that mandatory adoption of IFRS and firm-level reporting incentives improve analysts’ information environment. Overall, we confirm the positive effects of IFRS adoption, because the precision of public and consensus information is enhanced.

Details

Original languageEnglish
Pages (from-to)111-133
Number of pages23
JournalJournal of International Financial Markets, Institutions and Money
Volume60
Early online date14 Jan 2019
Publication statusPublished - May 2019

Keywords

  • IFRS, analysts' information environment, forecast accuracy, target price forecast dispersion, investor protection mechanisms