When Did Analyst Forecast Accuracy Benefit from Increased Cross-Border Comparability Following Ifrs Adoption in the Eu?

We examine the comparability benefits for analyst forecast accuracy following IFRS adoption in the EU. We argue that improvements in forecast accuracy are more likely to follow when IFRS implementation increases the number of closely relevant peer firms. To test this idea, we derive a firm-specific Expected Comparability Benefit (ECB) score as the number of industry-size matched foreign peers newly adopting IFRS.We show that improvements in analyst forecast accuracy following the mandatory adoption of IFRS across Europe are positively and significantly related to our ECB score. We also show that the comparability benefits reflected in forecast accuracy differ according to the pre-IFRS adoption GAAP of the firm and its new peers. In particular forecasts for firms in pre-IFRS regimes that are further from (closer to) IFRS benefit from new peers based in regimes that are closer to IFRS (based in either type of pre-IFRS regime). (C) 2015 Elsevier Inc. All rights reserved.