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

previously reporting under domestic standards, controlling for concurrent temporal trends
among US firms reporting under the historical cost model. We find that UK×POST is
positive but insignificant (0.395, t-statistic = 1.40), meaning that the evidence does not
point to a difference in dispersion between the pre-IFRS and post-IFRS periods.

Next, we investigate forecast dispersion further by examining whether the
insignificant coefficient on UK×POST is attributed to the time-varying effect of the 2005
standards transition. Following IFRS adoption, earnings include less-correlated serial

terms, raising the difficulty of prediction for analysts. If analysts eventually adjust to the
new standard and improve their prediction-making capacities, the effect of the change in
accounting standards should be attenuated in the later years of the post-adoption period.
We estimate Equation (2) to examine the time-varying effect and report the results in
Column (2). The coefficients of interest are the interaction terms between the UK and the

time-period indicator variables, which examine the changes between the pre- and post-
IFRS periods for UK firms, controlling for the temporal change among US firms. For
example, the interaction term UK×YEAR_0506 examines the change in forecast dispersion

for UK firms between the pre-IFRS period (i.e., the partial fair value model under UK
domestic standards) and the first two years of the post-IFRS period (i.e., the full fair value
model under IFRS).
We find that UK×YEAR_0506 (1.271, t-statistic = 4.04) is significant and positive,
but we do not find any other interaction terms to be significant (UK×YEAR_0708,

8,9
UK×YEAR_0910, UK×YEAR_1112, or UK×YEAR_1314). We also observe that the
increase in forecast dispersion exhibits a downward trend, peaking in the first two years
of the post-adoption period and becoming negative or close to zero in the final four years

8 To confirm that our results on forecast dispersion are not sensitive to a different scaler, we redefine
dispersion as the standard deviation of the individual analysts’ forecasts, scaled by the market
price in year t-1. We continue to find that forecast dispersion of UK firms increases subsequent to
IFRS adoption and that the increase exhibits a decreasing trend. In later years, we do not find the
forecast dispersion of UK firms to be different from the forecast dispersion in the pre-IFRS period
(untabulated).
9 UK×YEAR_1314 captures the changes due to the application of IFRS 13 for UK firms. An
insignificant coefficient on UK×YEAR_1314 is consistent with the notion that many concepts of IFRS
13 were consistent with the existing practices and that IFRS 13 provides more complete guidance for
the application of fair value accounting (PricewaterhouseCoopers (PwC), 2011).

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