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NTU Management Review Vol. 35 No. 2 Oct. 2025

forecast. Our analyses follow a difference-in-differences design. We include UK , POST ,
it
it
and UK ×POST as the test variables: UK is an indicator variable that equals one if the
it
it
it
company is a UK firm and equals zero if it is a US firm; POST is an indicator variable that
it
equals one from 2005 if firm i has a December 31 fiscal year-end, equals one from 2006 if
firm i has a non-December 31 fiscal year-end, and equals zero otherwise. The coefficient
on UK (β ) captures the effect of the partial fair value model (i.e., unrealized fair value
1
it
gains/losses do not pass through net income) on the properties of analysts’ earnings
forecasts relative to that of the historical cost model under US GAAP. The coefficient on
POST (β ) captures concurrent temporal effects on US firms that coincide with UK IFRS
2
it
adoption. The coefficient on the UK ×POST interaction term (β ) captures the incremental
it
it
3
effect of the full fair value model (i.e., unrealized fair value gains/losses pass through net
income) under IFRS relative to that of the historical cost model under US GAAP.
Equation (1) includes a series of firm-level control variables that are likely to affect
the properties of analyst forecasts. ROA is profitability, measured as net income scaled
it
by total assets at the end of year t-1. SIZE , referring to firm size, is the logarithm of
it
the market value of equity at the end of year t-1. LEV is the leverage ratio, measured
it
as total long-term debt divided by total assets at the end of year t-1. BM is the book-to-
it
market ratio at the end of year t-1. OTHER_A and OTHER_L are the percentage of non-
it
it
investment property assets and non-debt liabilities in total assets, respectively, measured at
the end of year t-1. EPS_CHANGE is the change in EPS, measured as the absolute value
it
of the difference in EPS between years t-1 and t divided by share price at the end of year t-1.
GROWTH is the sales growth rate between years t-2 and t-1. REIT is an indicator variable
it
it
that equals one if firm i is classified as a real estate investment trust and zero otherwise.
DIVERSIFIED is an indicator variable that equals one if firm i has a diversified portfolio
it
of investment properties and zero otherwise. STD_RET is the standard deviation of daily
it
stock returns for firm i in year t-1. PINT is the percentage of institutional ownership in
it
year t-1. FOLLOW , referring to analyst coverage, is the number of analysts issuing an
it
EPS forecast for firm i in year t. HORIZON is the log of 1 plus the average length of time
it
between the forecasting date and the earnings announcement date for firm i in year t.
Next, we examine whether the effect of the full fair value model relative to the
partial fair value model and the historical cost model varies over time. To capture time-

varying effects, we replace POST in Equation (1) with a vector of time-period indicators:

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