Intangible assets,IFRS and analysts’ earnings forecasts |
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Authors: | Keryn Chalmers Greg Clinch Jayne M. Godfrey Zi Wei |
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Affiliation: | 1. Department of Accounting and Finance, Monash University, Caulfield East, Victoria 3145, Australia;2. Department of Accounting and Business Information Systems, University of Melbourne, Victoria 3010, Australia;3. College of Business and Economics, Australian National University, Canberra, Australian Capital Territory 0200, Australia;4. School of Accountancy, Central University of Finance and Economics, Haidian District, Beijing 100081, China |
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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. |
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Keywords: | Analysts’ forecasts International financial reporting standards Intangible assets M40 M41 |
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