Full adoption of IFRSs in Brazil: Earnings quality and the cost of equity capital

Silva, Ricardo Luiz Menezes da; Nardi, Paula Carolina Ciampaglia

doi:10.1016/j.ribaf.2017.07.041

Cited by 22 publications

(15 citation statements)

References 47 publications

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“…The quality of accounting information combined with the quality of earnings will affect the cost of debt (COD). This is consistent with the results of research by Persakis, Anthony [4]; da Silva & Nardi [5]; Li, Si [6]; Eliwa, Haslam, & Abraham [7]; Barth, Konchitchki, & Landsman [8], all of who report that earnings quality negatively affects the cost of capital.…”

Section: Introductionsupporting

confidence: 90%

Accounting Information Quality, Board Narrative Disclosure, and the Cost of Debt

Diyanty¹,

Savitrah²,

Anggraheni³

2019

Proceedings of the Asia Pacific Business and Economics Conference (APBEC 2018)

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Company information disclosed in a financial statement is used as a reference by investors to assess corporate risk and investment-related decision-making. The higher the risk is, the higher the cost of debt (COD) demanded by an investor. This study investigates the influence of accounting information quality and the characteristics of the board of directors manifested in the report of the board of directors, which is a narrative report drafted by the board of directors, in the company's annual report on COD. The sample used is 106 nonfinancial companies listed on the Indonesia Stock Exchange between 2014 and 2015. The method used is a mixed method in terms of data collection. Quantitative data from annual reports and qualitative data from the report of the board of directors were analyzed by quantitative content analysis. The results of this study reveal that the quality of accounting information as measured by the earnings income has a significant negative effect on COD; however, if it is measured by earnings, predictability does not affect COD. In addition, the report of the board of directors has a significant positive effect on COD. These results indicate that COD is influenced by both accounting information in the financial statement and also by nonaccounting factors, i.e., characteristics of the board of directors, which is reflected in the report of the board of directors in the annual report.

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Section: Introductionsupporting

confidence: 90%

Accounting Information Quality, Board Narrative Disclosure, and the Cost of Debt

Diyanty¹,

Savitrah²,

Anggraheni³

2019

Proceedings of the Asia Pacific Business and Economics Conference (APBEC 2018)

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“…They find significant positive associations between analyst forecast accuracy and Level 1 and Level 2 fair value measurements and do not find such association for Level 3 measurements. Some show that the hypothesis of an increase in earnings quality after IFRS adoption [17,18]. The study supports the relevance of fair value, as indicated by the predictive ability for performance.…”

Section: Fair Value and Discretion In Accounting Measurementsupporting

confidence: 64%

Accounting Rules on Loan Losses and Security Gains Contribute to Earnings Management for the Banking Industry in Sri Lanka

Chickera

Liu

2019

SAJSSE

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One of the most serious concerns presently facing the accounting profession is the growing complexity, extension, and significance of issues adjoining fair value measurements. Many researchers and practitioners criticized the fair value accounting and blame for it causing economic failure. This paper studies licensed commercial banks and the ﬁnancial institution listed under the Colombo stock exchange to examine the association between fair value accounting and earnings management. In this research, we are examining the provisions for loan loss and discretionary security gains and losses by introducing the fair value assets and liabilities. We used the statistical methodology followed by Beatty et al. (2002) to test the banks reported fair value assets and liabilities associated with provisions for loan loss. We test several robustness tests and sensitivity analysis for our research design. We use both the current year and one-year ahead data test the provision for loan loss, discretionary security gains, and losses after controlling bank-specific features. We found evidence that; banks reported fair value assets and liabilities are positively associate with provision for loan loss. We found the evidence that the level 2 fair value assets and liabilities are a predominant determination for the association between provisions for loan loss. Our evidence is consistent with past research and persuades us that banks use fair value measurements to manage the earnings.

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“…Prior to the full convergence to the international accounting standards in 2010, Brazilian accounting was heavily influenced by tax legislation, meeting the needs of the tax authorities to the detriment of other users of accounting information. The full adoption of IFRS mitigated this problem, since the Accounting Pronouncements Committee dissociated corporate accounting from tax accounting and generated quality accounting information for creditors and corporate investors (Silva & Nardi, 2017).…”

Section: (H) International Financial Reporting Standards (Ifrs)mentioning

confidence: 99%

Descobrindo um Santo para Cobrir Outro: o gerenciamento de resultados em estatais brasileiras

Silva

Peixoto

Barboza

et al. 2020

CGG

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Objective:The accounting information can be manipulated in order to change the perception of the minority shareholders about the real situation of the firm. In case of state-owned enterprises (SOEs), they can have their wealth expropriated by the politicians and bureaucrats’ opportunistic behavior, which is an incentive to the earnings management (EM) practice. This study aims to analyze the state ownership effects on EM in Brazil, and investigate the link between EM, and ownership and control structures.Method: Data from 2006–2015,for 250 non-financial Brazilian public firms, which covers 26 SOEs. The analyses are based on multiple regression methods with panel data.Originality/Relevance:This study innovates by including in this analysis the interaction of state control with the excess of control rights over the ownership rights of the largest shareholders, and analyze the entrenchment effect. Additionally, addresses the EM both in terms of direction and breadth.Results: SOEs tend to take on income-increasing practices, which persisted even after the adoption of International Financial Reporting Standards (IFRS). However, the IFRS adoption led to a reduction in the level of EM, in special the positive trend. Yet, the firms' market value and size are significant for explaining EM.Theoretical/Methodological contributions: this study helps to understand the behavior of Brazilian SOEs, while reveals the SOE's political influence can induce greater information asymmetry and the control is more concentrated in there, which supposedly raises the risks of minority shareholders' expropriation. These results suggest the need for improvements in the transparency of these companies.

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Full adoption of IFRSs in Brazil: Earnings quality and the cost of equity capital

Cited by 22 publications

References 47 publications

Accounting Information Quality, Board Narrative Disclosure, and the Cost of Debt

Accounting Information Quality, Board Narrative Disclosure, and the Cost of Debt

Accounting Rules on Loan Losses and Security Gains Contribute to Earnings Management for the Banking Industry in Sri Lanka

Descobrindo um Santo para Cobrir Outro: o gerenciamento de resultados em estatais brasileiras

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