Do accounting standards matter to financial analysts? An empirical analysis of the effect of cross-listing from different accounting standards regimes on analyst following and forecast error

Abdallah, Abed AL-Nasser, Abdallah, Wissam ORCID: https://orcid.org/0000-0001-6038-2387 and Ismail, Ahmad 2012. Do accounting standards matter to financial analysts? An empirical analysis of the effect of cross-listing from different accounting standards regimes on analyst following and forecast error. The International Journal of Accounting 47 (2) , pp. 168-197. 10.1016/j.intacc.2012.03.002

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Abstract

This paper explores whether the effects of cross-listing on analyst following and forecast error differ among firms with different accounting standards. The results reveal a higher increase in the number of analysts for cross-listed firms that follow their home country's GAAP prior to cross-listing and reconcile or switch to IAS/US GAAP or UK GAAP after cross-listing, compared to those that adopt IAS or US GAAP prior to cross-listing. We find that firms that switch to IAS/US GAAP have a higher increase in analyst following after cross-listing compared to firms that reconcile to IAS/US GAAP. In addition, we find a higher increase in analyst following after cross-listing for firms from low-level accounting standards environments compared to firms from high-level accounting standards environments. Our results show evidence of an increase in the magnitude of analysts’ forecast error after cross-listing for firms that follow their home country's GAAP pre-cross-listing but reconcile post-cross-listing to IAS/US GAAP or UK GAAP. On the other hand, we report a decrease in forecast error for firms that switch to IAS/US GAAP.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HF Commerce > HF5601 Accounting H Social Sciences > HG Finance
Uncontrolled Keywords:	Cross-listing; Information disclosure; Accounting standards; Analyst following; Forecast error.
Publisher:	Elsevier
ISSN:	0020-7063
Last Modified:	20 Oct 2022 09:47
URI:	https://orca.cardiff.ac.uk/id/eprint/33097

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