Business, Management and Accounting
4 years ago

Mandatory IFRS Adoption Boosts Accuracy of Financial Forecasts in Firms

Contemporary Accounting Research
Does Mandatory IFRS Adoption Improve the Information Environment?*
Joanne Horton, George Serafeim, Ioanna Serafeim

Paper Summary

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Mandatory adoption of International Financial Reporting Standards (IFRS) improves the quality of information in capital markets. Firms that switch to IFRS have lower forecast errors compared to those using local accounting standards. This improvement is driven by both better information quality and increased comparability between firms. The switch to IFRS leads to a more accurate and reliable information environment for investors and analysts.