University of Oulu

The impact of IFRS 15 on analysts’ forecast accuracy

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Author: Kivioja, Tomi1
Organizations: 1University of Oulu, Oulu Business School, Department of Accounting, Accounting
Format: ebook
Version: published version
Access: open
Online Access: PDF Full Text (PDF, 0.8 MB)
Pages: 65
Persistent link:
Language: English
Published: Oulu : T. Kivioja, 2019
Publish Date: 2019-02-08
Thesis type: Master's thesis
Tutor: Järvinen, Janne
Reviewer: Järvinen, Janne
Rossi, Anna


The purpose of this research is to examine the impact of IFRS 15 on analysts’ forecast accuracy. IFRS 15 ‘Revenue from Contracts with Customers’ came into effect 1 January 2018.

The five-step model of revenue recognition required by the new accounting standard will likely change the timing and amount of revenue to be recognized from customer contracts that contain multiple performance obligations and where revenue is recognized over time. This change in accounting practices for revenue has the potential to affect the accuracy of analysts’ earnings per share (EPS) and sales forecasts.

The impact of IFRS 15 will be most clearly observable in industries that commonly engage in bundled contracts and long-term projects as these types of contracts are likely candidates for change in their accounting treatment. This research focuses on the changes in forecast accuracy for companies operating in such industries.

The research findings show that IFRS 15 has no impact on the accuracy of analysts’ EPS forecasts. However, for the sales forecasts the research results show that IFRS 15 increases forecast errors for the sample group of companies. The findings suggest that the implementation of a new accounting standard causes a temporary decrease in analysts’ forecast accuracy.

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Copyright information: © Tomi Kivioja, 2019. This publication is copyrighted. You may download, display and print it for your own personal use. Commercial use is prohibited.