Accounting | Finance | Management | Marketing | Operations and Information Systems
Analysts' Forecast Accuracy in Germany: The Effect of Different
Accounting Principles and Changes of Accounting Principles
Jürgen Ernstberger, Simon Krotter, Christian Stadler
Volume 1 | Issue 1 | May 2008 | www.business-research.or g
BuR - Business Research
Official Open Access Journal of VHB
Verband der Hochschullehrer für Betriebswirtschaft e.V.
Volume 1 | Issue 1 | May 2008 | 26-53
26
1. Introduction
We investigate the impact of different accounting
principles and of a change of accounting principles
on financial analysts’ earnings forecast accuracy.
Our results provide evidence that forecast accuracy
is higher for estimates based on data prepared un-
der internationally accepted accounting principles
(IAAP), i.e. International Accounting Standards
(IAS)/International Financial Reporting Standards
(IFRS)1 or United States Generally Accepted Ac-
counting Principles (US GAAP), than for estimates
based on German GAAP (also called “Handelsge-
setzbuch (HGB)”) data. Moreover, in years of the
adoption of new accounting principles the forecast
accuracy is lower than in other years for companies
switching from HGB to US GAAP. Germany pro-
vides a unique framework for these analyses for two
1 The International Financial Reporting Standards (IFRS)
were initially called International Accounting Standards (IAS).
In 2001, they changed name to International Financial Re-
porting Standards (IFRS). We use the term “IAS” when we
refer to periods before 2001, a combination of both terms
(“IAS/IFRS”), when we refer to a time period including years
before 2001 and the term “IFRS” when we refer to more recent
periods.
reasons: First, many publicly traded German com-
panies have successively switched to internationally
accepted accounting principles (IAAP), i.e. IAS/
IFRS or US GAAP, before 2005. Therefore, the
impact of the adoption of new accoun