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The Impact of Introducing Estimates of the Future on International Comparability in Earnings Expectations

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  • Christina Dargenidou
  • Stuart McLeay

Abstract

The objective of this paper is to assess whether the inclusion of improved estimates of the future in corporate annual financial statements has brought about greater international comparability. It is argued that including more relevant information in financial reporting enables users to estimate earnings that are more able to reflect current economic conditions and up-to-date expectations of the future and thus recognize news in a more timely manner. To reflect the underlying economics of integrating financial markets, earnings expectations must be not only more timely but also more comparable. Thus, in examining the increasingly widespread adoption of International Financial Reporting Standards (IFRS), this study considers both the timeliness and the comparability of earnings expectations in the European Union, before and after the mandatory IFRS implementation. The empirical findings support the view that users' earnings estimates have indeed become more timely in recognizing market news and significantly more comparable.

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  • Christina Dargenidou & Stuart McLeay, 2010. "The Impact of Introducing Estimates of the Future on International Comparability in Earnings Expectations," European Accounting Review, Taylor & Francis Journals, vol. 19(3), pages 511-534.
    • Handle: RePEc:taf:euract:v:19:y:2010:i:3:p:511-534
    DOI: 10.1080/09638180.2010.496550
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    Cited by:

    1. Dimitropoulos, Panagiotis E. & Asteriou, Dimitrios & Kousenidis, Dimitrios & Leventis, Stergios, 2013. "The impact of IFRS on accounting quality: Evidence from Greece," Advances in accounting, Elsevier, vol. 29(1), pages 108-123.
    2. Haruna, Dzugwahi & Apedzan Emmanuel, Kighir, 2018. "Ifrs Adoption And Shareholders' Wealth Of Deposit Money Banks In Nigeria," International Journal of Contemporary Accounting Issues-IJCAI (formerly International Journal of Accounting & Finance IJAF), The Institute of Chartered Accountants of Nigeria (ICAN), vol. 7(2), pages 16-30, December.
    3. Solomon Opare & Muhammad Nurul Houqe & Tony van Zijl, 2021. "Meta‐analysis of the Impact of Adoption of IFRS on Financial Reporting Comparability, Market Liquidity, and Cost of Capital," Abacus, Accounting Foundation, University of Sydney, vol. 57(3), pages 502-556, September.
    4. Hasyyati Yusrina & Mukhtaruddin Mukhtaruddin & Luk Luk Fuadah & Zunaidah Sulong, 2017. "International Financial Reporting Standards Convergence and Quality of Accounting Information: Evidence from Indonesia," International Journal of Economics and Financial Issues, Econjournals, vol. 7(4), pages 433-447.
    5. Lambert Jerman, 2015. "Les Enjeux De L'Application Des Normes Ias-Ifrs : L'Etude Des Preparateurs Des Comptes, Une Perspective De Recherche Encore Inexploree," Post-Print hal-01188736, HAL.

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