Value Relevance vis-à-vis Disclosure on Business Combinations and Goodwill Recognized by Publicly Traded Brazilian Companies

Abstract

The objective of this study is to examine the value relevance of the level of disclosure on business combinations and goodwill recognized by publicly traded Brazilian companies. The research sample is composed of publicly traded Brazilian companies that carried out any type of business combination, as the acquiring entity, between 2010 and 2013, yielding a total sample of 202 observations. To measure the disclosure level of each, a metric was created based on CPC-15 R1 (2011) to examine certain disclosure items in order to render a greater level of detail. Data collection was carried out using the footnotes to the annual consolidated standardized financial statements (DFPs) available from the São Paulo Stock Exchange (BM&FBOVESPA) website. The results revealed that disclosure levels for business combinations are positively and significantly associated with the stock price of the companies analyzed. As to the recognition of goodwill during business combinations, despite the fact that it represents a significant share of the value of the transactions, no statistical significance explaining stock price behavior was found. It also bears mentioning that the average level of disclosure identified in the explanatory notes in the sample was very low, indicating that companies need to improve when it comes to transparency of information.

Compliance with IFRS 16 Mandatory Presentation and Disclosure Requirements and Company Characteristics: Evidence from an Emerging Market

“…They reported that the company value has positive association with such compliance. Souza and Borba (2017) investigated whether the disclosure level on IFRS 3 have value…”

O Value Relevance é relevante?

“…Assim, a informação contábil relevante é aquela que influencia a tomada de decisão de seus usuários (Macedo, Machado, Murcia & Machado, 2011). Por isso, as empresas que possuem melhor nível de divulgação tendem a ser mais valorizadas (Souza & Borba, 2017).…”

Leases Financing, Liquidity, and Return on Equity of Selected Manufacturing Companies in Nigeria: Implication of IFRS 16 Leases

“…Manufacturing companies tend to attach much premium on the usage of heavy equipment and plant utilization in actualizing the corporate effective production goals. Liquidity is significant in maximizing the shareholders' returns, as studies have advanced that liquidity has been linked to having a direct association with equity returns in manufacturing companies Tsalavoutas, Tsoligkas and Evans [38]: Souza and Borba [32]; Tanase, Calota, & Oncioiu [37]. Leasing improves the liquidity position of manufacturing companies when effective appraisal investment decisions are carried out comparing various alternatives.…”