Impact of the mandatory adoption of IFRS on the quality of financial forecasts

Abstract

This article analyses the impact of the mandatory adoption of IFRS on the quality of financial forecasts in the French context. Our sample includes SBF 120 companies monitored over the period 2002–2012. The quality of the financial forecasts was assessed through two important characteristics of the accounting information which are the level of errors in the financial forecasts and the level of dispersion. After empirical validation we found that the transition to international accounting standards has led to an improvement in the quality of financial forecasts as the level of errors in financial forecasts has decreased for financially autonomous companies. In particular, we noted that the level of dispersion for indebted companies has decreased.

Keywords

• ifrs
• financial forecasts
• error
• dispersion