The Impact of IFRS Adoption on the Accuracy of Analysts' Forecasts in the Saudi Stock Exchange

Ahmed A. Al Faran

doi:10.33193/IJoHSS.53.2024.668

Ahmed A. Al Faran Department of Accounting, College of Business & Economics, Qassim University, Saudi Arabia

DOI: https://doi.org/10.33193/IJoHSS.53.2024.668

الكلمات المفتاحية: International Financial Reporting Standards, accuracy of financial analysts' forecasts, dispersion of financial analysts' forecasts Saudi listed companies

الملخص

This paper examines the impact of the mandatory adoption of International Financial Reporting Standards (IFRS) since 2017 on the ability of financial analysts to forecast earnings accurately in Saudi Arabia during the period 2014–2019. Specifically, the research investigates whether mandatory IFRS adoption has improved the accuracy of analysts to forecast earnings. The methodology involves using a static regression on a panel data model with temporal "dummy" variables to test the hypothesis formulated for the study. The study has one hypothesis, i.e., the financial analysts' forecast accuracy is increased after the mandatory adoption of IFRS in Saudi Arabia. The study consists of 17 listed Saudi public companies over 6 extended period for a total of 102 observations. The study findings provide evidence of no improvements in the accuracy of earnings forecasts of Saudi-listed firms after adopting IFRS. The study contributes to the debate on the desirability of the experienced current trends towards one global set of accounting standards.

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