The importance of brokerage house size in determining the utility of IFRS8 segment data to financial analysts

Al-Aamri, Ibrahim Ali; Hussain, Simon; Su, Chen; Hsu, Hwa-Hsien

Abstract

This paper reveals the important role played by brokerage house size in determining the utility of segment data to financial analysts. Brokerage house size is a proxy both for analysts’ access to company managers and for their access to in-house expertise. Using data for large UK firms, we reveal that the shift to International Financial Reporting Standard 8 (IFRS8) led to significant improvements in forecast accuracy for analysts in large brokerage houses but not for those in small brokerage houses. In addition, the forecasting ability of analysts in smaller brokerage houses was impaired when segments represented lines-of-business. No such effect was evident in the case of large brokers’ analysts. We link these findings to the improved insight which analysts in large brokers obtained from their superior access to managers and in-house support.

Citation

Al-Aamri, I. A., Hussain, S., Su, C., & Hsu, H. (2022). The importance of brokerage house size in determining the utility of IFRS8 segment data to financial analysts. Journal of International Accounting, Auditing and Taxation, 47, Article 100472. https://doi.org/10.1016/j.intaccaudtax.2022.100472

• Journal Article Type: Article
• Online Publication Date: May 20, 2022
• Publication Date: 2022-06
• Deposit Date: Mar 28, 2022
• Publicly Available Date: May 21, 2024
• Journal: Journal of International Accounting, Auditing and Taxation
• Print ISSN: 1061-9518
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 47
• Article Number: 100472
• DOI: https://doi.org/10.1016/j.intaccaudtax.2022.100472
• Public URL: https://durham-repository.worktribe.com/output/1209935