Financial Management Coursework

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CourseFINA1032: Foundations Scholarship (ACC)Course School/LevelBU/PG CourseworkEssayAssessment Weight30.00%
TutorJ Molyn, V Chinthalapati, P Ntozi-ObwaleSubmission Deadline03/12/2012

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Coursework is receipted on the understanding that it is the student's own work and that it has not, in whole or part, been presented elsewhere for assessment. Where material has been used from other sources it has been properly acknowledged in accordance with the University's Regulations regarding Cheating and Plagiarism. ________________________________________

000744245 Thi Hoai Ly Dinh
000745588 Phuong Thao Nguyen
000748773 Adjoba Houra
Tutor's comments

Grade Awarded___________For Office Use Only__________Final Grade_________ Moderation required: yes/noTutor______________________Date _______________ Topic 4: Economic consequences of adoption of the International Financial Reporting Standards (IFRS) 000744245 Thi Hoai Ly Dinh

000745588 Phuong Thao Nguyen
000748773 Adjoba Houra

ContentPage
Introduction……………………………………………………………………….4 Mandatory IFRS adoption’s impact on analysts' forecasts……………………5 The persistence of earnings and earnings components after the adoption of IFRS..............................................................................................................5 The impact of IFRS adoption on foreign direct investment……………………6 Impact of International Financial Reporting Standard adoption on key financial ratios……………………………………………………………………..7 Summary…………………………………………………………………………..9 References……………………………………………………………………….10

Introduction
The international financial reporting standards (IFRS) are set by the international accounting standard indicating how specific kinds of transactions and other events should be stated in the financial statements. This was issued by the International Accounting Standard Board (IASB). The objective of conducting IFRS is to improve the quality of accounting reports and making it easier for the financial market to exchange information among countries. According to Ober (2008), there are more than 100 countries that have adopted IFRS these days, such as England, USA, Germany, China and India. Hence, IFRS are a homogenous way for international accounting standard and have effects on analysts’ forecast, foreign direct investment. On the other hand, they also generate considerable changes in accounting figures and financial ratios. All of them will be discussed in detail in the rest of this essay.

Mandatory IFRS adoption’s impact on analysts' forecasts
According to Jiao, Koning, Mertens and Roosenboom (2012), the mandatory adoption of IFRS significantly affects collected data on earnings and more generally financial statement information. By examining the earning quality as illustrated in the characteristics of analyst forecasts in nineteen European countries, the study has brought about positive results after applying IFRS. The consequences of IFRS are investigated indirectly in several factors such as: size of firms, analyst numbers, performance fluctuation, and the models of country and industry. However, IFRS adoption has brought many benefits in Europe, regarding to the significant improvement in making decision by analysts. Overall, the study contributes to understanding the impacts of the adoption of ‘high quality accounting language’ (Jiao et al., 2012, p.56). This generates the effectiveness of financial information for participants of the financial market. These results are appropriate to the argument on whether there is a need for one international set of accounting standards in comparison to some return based studies inferred from the...
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