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The Effect of the Fair Value Reporting Model on Analyst Forecast Properties: Evidence from Real Estate
Firms

and declines over time. From 2009 to 2010, we do not find the forecast dispersion to be
distinct from that under UK domestic standards. These results are consistent with the
notion that the effect of the change in accounting standards is not permanent and that
analysts improve through experience in later years. Second, we find that the income

statement and the balance sheet being reported under the full fair value model and
improved consistency between the two financial statements give way to analysts spending
less time preparing their forecasts. As with the time-varying effect on forecast dispersion,

we find that the change in forecast duration is not static throughout the post-IFRS period,
with the reduction in response time becoming more pronounced over time.
Finally, we revisit Liang and Riedl (2014) to examine whether the adoption of the
full fair value model also has a time-varying effect on forecast error. We find that forecast
error, on average, exhibits an increase following IFRS adoption. However, the increase

in forecast error is driven by early post-adoption years, exhibiting a declining trend over
time. We fail to document a difference after 2010, which is the last year of the sample used
in Liang and Riedl (2014). This new evidence is also consistent with the identified time-

varying effect on forecast dispersion and forecast revision response time.
Overall, we provide evidence of the effects of changes in accounting standards (in
this case, IFRS adoption) varying over time. Our findings extend prior work, particularly
that of Liang and Riedl (2014), who examine forecast error but do not cover forecast
dispersion or forecast revision response time. Moreover, their study fails to address the

time-varying impact of standards transitions, which is a key contribution of our analysis.
Importantly, our conclusions are drawn from a sample of real estate firms; they may not
be fully generalizable to other industries. While sectors like banking, insurance, and

investment also engage in fair value accounting, they operate under distinct regulatory
frameworks and market environments. Still, our focus on a single industry mitigates
concerns over potential omitted variable bias and reduces the risk of our findings being
driven by industry-specific characteristics rather than the accounting standards themselves.
While we do not believe that the observed temporal trends are unique to the UK, our

study does not empirically examine other jurisdictions. Future research should explore
whether similar time-varying adjustment patterns are present in other countries undergoing
comparable transitions in accounting standards and examine the temporal dynamics of fair

value accounting across a wider range of sectors to provide more generalizable insights.

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