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The information content of earnings for UK firms disclosing under UK GAAP and IFRS

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  • Olibe, Kingsley O.
  • Strawser, Robert H.
  • Strawser, William R.

Abstract

Our study examines whether the earnings announcements of the United Kingdom (UK) firms cross-listed on United States (US) stock exchanges exhibit distinctive impacts on stock price and trading volume when disclosing these earnings using UK generally accepted accounting principles (GAAP) versus International Financial Reporting Standards (IFRS). We find that IFRS earnings announcements exhibit a greater amount of return variation on the days immediately surrounding the earnings announcement than do UK GAAP earnings announcements even after controlling for profitability, risk, growth, and firm size. We also find sustained abnormal trading volume activity preceding and subsequent to UK GAAP announcements; whereas, abnormal trading volume surrounding IFRS announcements reveals little significance preceding the announcement and a less sustained reaction in the days following the announcement of earnings. Taken together, our study suggests that IFRS earnings announcements provide more earnings surprise on the day of the announcement and result in more consensus following the announcement than do UK GAAP earnings announcements, despite the relative similarity between the two systems of earnings disclosures.

Suggested Citation

  • Olibe, Kingsley O. & Strawser, Robert H. & Strawser, William R., 2022. "The information content of earnings for UK firms disclosing under UK GAAP and IFRS," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 46(C).
    • Handle: RePEc:eee:jiaata:v:46:y:2022:i:c:s1061951822000040
    DOI: 10.1016/j.intaccaudtax.2022.100449
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    More about this item

    Keywords

    International financial accounting standards; United Kingdom Generally Accepted Accounting Principles; Earnings announcements; Price response; Trading volume;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting

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