TY  - JOUR
AB  - Purpose This study aims to determine whether financial statement users suffered a significant loss of information when, in November 2007, the SEC dropped the requirement for foreign private issuers using International Financial Reporting Standards (“IFRS firms”) to reconcile their financial statements to US generally accepted accounting principles (GAAP).Design/methodology/approach The study investigates whether analyst forecast errors and forecast dispersion increased for IFRS firms to a greater extent than for US GAAP firms after the Securities and Exchange Commission (SEC) dropped the reconciliation requirement. Using a treatment group comprised of IFRS firms and a matched sample of US GAAP firms, this study uses regression analyses to compare forecast errors and dispersion for the last fiscal year the reconciliation was available and the first fiscal year during which the reconciliation was unavailable to analysts.Findings The study finds evidence that forecast errors for IFRS firms exhibited no systematic change after the reconciliation was no longer available for analysts covering those firms. Thus, it does not appear that dropping the reconciliation requirement was associated with a change in forecast accuracy. However, the study does find evidence of increased dispersion in the IFRS firms’ forecasts relative to their US GAAP counterparts after the reconciliation requirement was dropped.Practical implications These findings have implications for evaluating the Securities and Exchange Commission’s 2007 decision to eliminate the reconciliation for IFRS firms. Specifically, the Securities and Exchange Commission’s decision does not appear to have significantly altered analysts’ information environments.Originality/value This paper contributes to the understanding of how a group of sophisticated financial statement users adapt to different sets of accounting standards.
VL  - 16
IS  - 1
SN  - 1985-2517
DO  - 10.1108/JFRA-08-2016-0067
UR  - https://doi.org/10.1108/JFRA-08-2016-0067
AU  - Ricketts Robert C.
AU  - Riley Mark E.
AU  - Shortridge Rebecca Toppe
PY  - 2018
Y1  - 2018/01/01
TI  - Information content of IFRS versus GAAP financial statements
T2  - Journal of Financial Reporting and Accounting
PB  - Emerald Publishing Limited
SP  - 120
EP  - 137
Y2  - 2024/04/26
ER  -