Decision usefulness of fair value accounting for investment property: The impact of IFRS adoption on analyst forecast error and dispersion

Abstract: The aim of this thesis is to study the impact of the 2005 IFRS/IAS 40 adoption on financial analyst forecast accuracy and dispersion in predicting earnings for Swedish listed real estate companies. A panel data regression with fixed effects and a paired two sample t-test are used to analyze the data. We find that there are no significant changes in forecast error or dispersion when comparing the periods before and after implementation. However, in the adoption year (2005) we find a significant increase in forecast error. The findings seem to support previous research questioning the decision usefulness of full fair value accounting for non-financial assets marked-to-model in general and investment property specifically.