Financial Analysts' Forecast Accuracy : Before and After the Introduction of AIFRS

Abstract

We examine whether financial analysts’ forecast accuracy differs between the pre- and post- adoption ofAustralian Equivalents to the International Financial Reporting Standards (AIFRS). We find that forecastaccuracy has improved after Australia adopted AIFRS. As a secondary objective, this paper also investigatesthe role of financial analysts in reducing information asymmetry in today’s Australian capital market. We findweak evidence that more analysts following a stock do not help to improve forecast accuracy by bringingmore firm-specific information to the market.

Keywords

• Analysts’ forecasts
• AIFRS
• Forecast errors
• Intangible assets