The study by Ashbaugh and Pincus (2001) is interesting because it uses analysts’
forecasts as a benchmark to evaluate one GAAP versus another. Analysts’ expectations are
directly observable (unlike market expectations) and analysts are considered sophisticated users of financial accounting information. Future research can build on this paper in several ways.
For example, is the greater forecast accuracy of IAS earnings attributable to increased
comparability and/or increased transparency? Do IAS improve the ability to assess risk in addition to future performance? What effect do IAS have on overall analyst uncertainty (i.e.,dispersion of forecasts)? Does the implementation of IAS (i.e., footnote reconciliation versus full IAS reporting) affect the results?