Three essays on international capital markets

Abstract

This dissertation contains three essays on international capital markets. The first essay examines the information environment of analysts in countries following the mandatory adoption of the International Financial Reporting Standards (IFRS). We examine the analysts’ forecast precision across 18 countries before and after they mandated the adoption of the IFRS, relative to 12 countries that retained local accounting standards. Using empirical proxies suggested by Barron et al. (1998) model, we find that the precision of both common and private information in analyst forecasts increase after IFRS adoption. In order to invest more effort in private information discovery, analysts are reducing the firm coverage. Partitioning my sample, we find that the analysts’ information improves more in countries with better shareholders’ rights protection or in countries with higher disclosure ratings. My result is consistent with theories that posit that better accounting disclosure triggers new information generation by sophisticated information processors.