Information Content of Earnings Announcements Around IFRS Adoption and a Simultaneous Change in Press Release Disclosure in Italy

This study investigates the effect of a security regulation that occurs concomitantly with International Financial Reporting Standards (IFRS) adoption on the information content of earnings announcements in Italy. To identify the effect of this regulation, we use a treatment (i.e., Italy) and a benchmark sample of IFRS countries that vary in the adoption of the security regulation, but are similar to Italy along a set of institutional dimensions. We find that the information content of earnings announcements increases after year 2005. This increase, however, is more pronounced in Italy. Corroborating the effects of the security regulation, we hand-collect and analyze non-earnings disclosures in 2,106 earnings announcement press releases. Our findings suggest that the inclusion of detailed IFRS financial statements in earnings announcements increased significantly only in Italy, and this explains the increased informativeness of IFRS earnings announcements. Our findings contribute to the recent literature suggesting that there are other complementary changes concurrent with IFRS that are necessary to confer capital market benefits