Zi Wei's research while affiliated with University of Melbourne and other places

We investigate whether the adoption of IFRS in 2005 by Australian firms has been associated with a loss of potentially useful information about intangible assets, as conjectured by Matolcsy and Wyatt (2006). We find that the negative association between analyst forecast error magnitude/dispersion and aggregate reported intangibles previously documented becomes stronger subsequent to IFRS adoption, primarily for firms with high levels of underlying intangible assets. This is contrary to Matolcsy and Wyatt (2006)’s conjecture. Our result is largely due to reported goodwill, rather than other intangible assets, suggesting that the impairment approach to goodwill valuation required by IFRS conveys more useful information than does the former straight-line amortisation approach. When we investigate a sub-sample of firms that report lower intangibles under IFRS than under the prior Australian GAAP, we do find evidence consistent with the Matolcsy and Wyatt (2006) conjecture.

We provide some initial descriptive and exploratory results concerning the earnings-returns relation in periods of poor versus strong macroeconomic performance. Based on data from three countries – Australia, the U.S., and China – our results indicate some differences for U.S. and Chinese firms, but not Australian firms. However the results for U.S. and Chinese firms are somewhat contradictory – U.S. (Chinese) firms generally exhibit a stronger (weaker) earnings-returns association in periods of both negative and strongly positive macroeconomic performance. These differences appear largely attributable to reported profits and not to losses. We find no evidence that poor earnings news released during periods such as the GFC is ‘punished’ relative to other periods.