IFRS and market reactions to analyst stock recommendations: Evidence from Korea
- Authors
- Hwang, I.; Jeong, K.; Mo, K.
- Issue Date
- Mar-2017
- Publisher
- People and Global Business Association
- Keywords
- Analyst stock recommendation; Corporate information environment; IFRS; Market reaction
- Citation
- Global Business and Finance Review, v.22, no.1, pp 91 - 105
- Pages
- 15
- Journal Title
- Global Business and Finance Review
- Volume
- 22
- Number
- 1
- Start Page
- 91
- End Page
- 105
- URI
- https://scholarworks.bwise.kr/cau/handle/2019.sw.cau/6143
- DOI
- 10.17549/gbfr.2017.22.1.91
- ISSN
- 1088-6931
2384-1648
- Abstract
- We examine changes in both short-term and long-term market reactions to financial analysts’ stock recommendations around the time of IFRS adoption. If the adoption of IFRS improves the corporate-information environment, thereby diminishing the role of the analyst as a generator of information, investors will become less dependent on analyst recommendations; thus, market reactions to analysts’ stock recommendations will decrease. However, if the corporate-information environment deteriorates after the adoption of IFRS, investors will become more dependent on information from intermediaries, such as financial analysts; thus, market reactions to analysts’ stock recommendations will increase. Based on observations of South Korean companies, we find that short-term market reactions to analysts’ stock recommendations diminish after the adoption of IFRS but fail to find a decrease in long-term market reactions to analysts’ stock recommendations after the adoption of IFRS. Our results suggest that IFRS enhances the corporate-information environment and, therefore, that investors rely less on financial analysts’ recommendations after the adoption of IFRS. © 2017 People and Global Business Association.
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