IAS 39 reclassification choice and analyst earnings forecast properties
In October 2008, the International Accounting Standards Board amended IAS 39 to allow banks to retroactively reclassify financial assets that previously were measured at fair value to amortized cost. By reclassifying financial assets, a bank can potentially avoid recognizing the unrealized fair valu...
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sg-smu-ink.soa_research-19472017-03-24T04:37:41Z IAS 39 reclassification choice and analyst earnings forecast properties LIM, Chee Yeow LIM, Chu Yeong LOBO, Gerald J. In October 2008, the International Accounting Standards Board amended IAS 39 to allow banks to retroactively reclassify financial assets that previously were measured at fair value to amortized cost. By reclassifying financial assets, a bank can potentially avoid recognizing the unrealized fair value losses and thereby increase its income and regulatory capital during a market downturn. We examine the implications of the reclassification decision by banks for the properties of financial analyst earnings forecasts during 2008–2009, when economic conditions were highly volatile. We find that the reclassification choice during the financial crisis reduced analyst forecast accuracy and increased forecast dispersion. We also find that the observed decline in analyst forecasting ability is limited to the year of adoption when the economic environment was highly volatile. 2013-09-01T07:00:00Z text application/pdf https://ink.library.smu.edu.sg/soa_research/948 info:doi/10.1016/j.jaccpubpol.2013.06.006 https://ink.library.smu.edu.sg/context/soa_research/article/1947/viewcontent/IAS39ReclassificationChoice_2013_pp.pdf http://creativecommons.org/licenses/by-nc-nd/4.0/ Research Collection School Of Accountancy eng Institutional Knowledge at Singapore Management University Accounting Portfolio and Security Analysis |
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Accounting Portfolio and Security Analysis LIM, Chee Yeow LIM, Chu Yeong LOBO, Gerald J. IAS 39 reclassification choice and analyst earnings forecast properties |
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In October 2008, the International Accounting Standards Board amended IAS 39 to allow banks to retroactively reclassify financial assets that previously were measured at fair value to amortized cost. By reclassifying financial assets, a bank can potentially avoid recognizing the unrealized fair value losses and thereby increase its income and regulatory capital during a market downturn. We examine the implications of the reclassification decision by banks for the properties of financial analyst earnings forecasts during 2008–2009, when economic conditions were highly volatile. We find that the reclassification choice during the financial crisis reduced analyst forecast accuracy and increased forecast dispersion. We also find that the observed decline in analyst forecasting ability is limited to the year of adoption when the economic environment was highly volatile. |
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LIM, Chee Yeow LIM, Chu Yeong LOBO, Gerald J. |
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LIM, Chee Yeow LIM, Chu Yeong LOBO, Gerald J. |
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LIM, Chee Yeow |
title |
IAS 39 reclassification choice and analyst earnings forecast properties |
title_short |
IAS 39 reclassification choice and analyst earnings forecast properties |
title_full |
IAS 39 reclassification choice and analyst earnings forecast properties |
title_fullStr |
IAS 39 reclassification choice and analyst earnings forecast properties |
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IAS 39 reclassification choice and analyst earnings forecast properties |
title_sort |
ias 39 reclassification choice and analyst earnings forecast properties |
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Institutional Knowledge at Singapore Management University |
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2013 |
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https://ink.library.smu.edu.sg/soa_research/948 https://ink.library.smu.edu.sg/context/soa_research/article/1947/viewcontent/IAS39ReclassificationChoice_2013_pp.pdf |
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