posted on 2020-07-08, 08:29authored byYousuf Khamis Al Mabsali, Robert Hayward, Yasser EliwaYasser Eliwa
This paper examines the tools that managers use to meet or beat analyst forecasts in the post-International Financial Reporting Standards (IFRS) period, using a sample of UK firms for the period 2005 to 2015. Our results are consistent with the view that managers utilize both classification shifting and managerial guidance to hit analyst forecasts. The results suggest that managers are more likely to continue to exercise their discretion in using these two tools following the adoption of IFRS. This paper supports the argument that managers engage in classification shifting, and IFRS adoption is more likely to increase market demand for more disclosures through managerial guidance. In contrast, there is weak evidence to suggest that real earnings management or accrual earnings management are used to hit analyst forecasts. Our results are expected to be of interest to policymakers, regulators, and external auditors.
History
School
Business and Economics
Department
Business
Published in
Journal of International Accounting, Auditing and Taxation
This paper was accepted for publication in the journal Journal of International Accounting, Auditing and Taxation and the definitive published version is available at https://doi.org/10.1016/j.intaccaudtax.2021.100383.