The effect of IFRS mandatory adoption on the information asymmetry

This paper examines whether the mandatory adoption of IFRS/IAS in the European Union is beneficial in terms of the information content of earnings. The informational relevance of earnings was reflected by the level of information asymmetry measured by the cost of capital and the financial analysts’...

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Autores principales:	Hela Turki, Senda Wali, Younes Boujelbene
Formato:	article
Lenguaje:	EN
Publicado:	Taylor & Francis Group 2016
Materias:	ifrs information content information asymmetry cost of capital and financial analysts’ forecasts Business HF5001-6182 Management. Industrial management HD28-70
Acceso en línea:	https://doaj.org/article/7236da3caffc4163a529025da6c38c90
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spelling	oai:doaj.org-article:7236da3caffc4163a529025da6c38c902021-12-02T14:07:31ZThe effect of IFRS mandatory adoption on the information asymmetry2331-197510.1080/23311975.2016.1209100https://doaj.org/article/7236da3caffc4163a529025da6c38c902016-12-01T00:00:00Zhttp://dx.doi.org/10.1080/23311975.2016.1209100https://doaj.org/toc/2331-1975This paper examines whether the mandatory adoption of IFRS/IAS in the European Union is beneficial in terms of the information content of earnings. The informational relevance of earnings was reflected by the level of information asymmetry measured by the cost of capital and the financial analysts’ forecasts. So, the article purpose is to study the impact of IFRS adoption on the cost of capital and on the financial analysts’ forecasts. Using an unbalanced panel data of firm—year observations spanning from 2002 to 2012, we hypothesize and empirically find the following. First, IFRS adoption represents a key determinant of information asymmetry reduction, as it contributes significantly to the decrease in the capital cost for the post-IFRS period. Second, the adoption of these international standards has significantly contributed to the improvement of financial analysts’ forecasts reflected by an enhancement of the forecasts properties, a decrease in dispersion and error. The results contribute to the literature dealing with the additional informational content stemming from IFRS mandatory adoption. The originality of this study consists primarily in the use of a long analysis period which eliminates any bias relating to the period of learning and understanding of IFRS and any bias related to the financial crisis started in 2007 and secondly in the use of two measurements of information asymmetry which makes the results obtained more robust.Hela TurkiSenda WaliYounes BoujelbeneTaylor & Francis Grouparticleifrsinformation contentinformation asymmetrycost of capital and financial analysts’ forecastsBusinessHF5001-6182Management. Industrial managementHD28-70ENCogent Business & Management, Vol 3, Iss 1 (2016)
institution	DOAJ
collection	DOAJ
language	EN
topic	ifrs information content information asymmetry cost of capital and financial analysts’ forecasts Business HF5001-6182 Management. Industrial management HD28-70
spellingShingle	ifrs information content information asymmetry cost of capital and financial analysts’ forecasts Business HF5001-6182 Management. Industrial management HD28-70 Hela Turki Senda Wali Younes Boujelbene The effect of IFRS mandatory adoption on the information asymmetry
description	This paper examines whether the mandatory adoption of IFRS/IAS in the European Union is beneficial in terms of the information content of earnings. The informational relevance of earnings was reflected by the level of information asymmetry measured by the cost of capital and the financial analysts’ forecasts. So, the article purpose is to study the impact of IFRS adoption on the cost of capital and on the financial analysts’ forecasts. Using an unbalanced panel data of firm—year observations spanning from 2002 to 2012, we hypothesize and empirically find the following. First, IFRS adoption represents a key determinant of information asymmetry reduction, as it contributes significantly to the decrease in the capital cost for the post-IFRS period. Second, the adoption of these international standards has significantly contributed to the improvement of financial analysts’ forecasts reflected by an enhancement of the forecasts properties, a decrease in dispersion and error. The results contribute to the literature dealing with the additional informational content stemming from IFRS mandatory adoption. The originality of this study consists primarily in the use of a long analysis period which eliminates any bias relating to the period of learning and understanding of IFRS and any bias related to the financial crisis started in 2007 and secondly in the use of two measurements of information asymmetry which makes the results obtained more robust.
format	article
author	Hela Turki Senda Wali Younes Boujelbene
author_facet	Hela Turki Senda Wali Younes Boujelbene
author_sort	Hela Turki
title	The effect of IFRS mandatory adoption on the information asymmetry
title_short	The effect of IFRS mandatory adoption on the information asymmetry
title_full	The effect of IFRS mandatory adoption on the information asymmetry
title_fullStr	The effect of IFRS mandatory adoption on the information asymmetry
title_full_unstemmed	The effect of IFRS mandatory adoption on the information asymmetry
title_sort	effect of ifrs mandatory adoption on the information asymmetry
publisher	Taylor & Francis Group
publishDate	2016
url	https://doaj.org/article/7236da3caffc4163a529025da6c38c90
work_keys_str_mv	AT helaturki theeffectofifrsmandatoryadoptionontheinformationasymmetry AT sendawali theeffectofifrsmandatoryadoptionontheinformationasymmetry AT younesboujelbene theeffectofifrsmandatoryadoptionontheinformationasymmetry AT helaturki effectofifrsmandatoryadoptionontheinformationasymmetry AT sendawali effectofifrsmandatoryadoptionontheinformationasymmetry AT younesboujelbene effectofifrsmandatoryadoptionontheinformationasymmetry
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The effect of IFRS mandatory adoption on the information asymmetry

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