Intangible assets, IFRS and analysts' earnings forecasts

Keryn Chalmers*, Greg Clinch, Jayne M. Godfrey, Zi Wei

*Corresponding author for this work

Research output: Contribution to journalArticle

39 Citations (Scopus)

Abstract

We investigate whether the adoption of International Financial Reporting Standards (IFRS) in 2005 by Australian firms has been associated with a loss of potentially useful information about intangible assets. We find that the negative association between the accuracy and dispersion of analysts' earnings forecasts and aggregate reported intangibles previously documented by Matolcsy and Wyatt (2006) becomes stronger subsequent to IFRS adoption, primarily for firms with high levels of underlying intangible assets. Our result is largely attributable to reported goodwill, rather than other intangible assets, suggesting that the impairment approach to goodwill valuation required by IFRS conveys more useful information than does the former straight-line amortization approach. When we investigate a sub-sample of firms that report lower intangibles under IFRS than under the prior Australian GAAP, we do find some evidence consistent with a loss of useful information relating to intangibles.

Original languageEnglish
Pages (from-to)691-721
Number of pages31
JournalAccounting and Finance
Volume52
Issue number3
DOIs
Publication statusPublished - 1 Sep 2012
Externally publishedYes

Keywords

  • Analysts' forecasts
  • Intangible assets
  • International financial reporting standards
  • M40
  • M41

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