Structural Changes in Covenants Through the Adoption of IFRS in Brazil
Structural Changes in Covenants Through the Adoption of IFRS in Brazil

Author: Aziz Beiruth

Publisher:

Published: 2017

Total Pages:

ISBN-13:

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This study examines changes in the structure of covenants in debt agreements of companies issuing debentures during the adoption of International Financial Reporting Standards (IFRS) in Brazil. We investigate debt contracts of public and private companies that issued debentures before and after IFRS adoption in Brazil, between the years 2006-2008 and 2011-2014. We develop a database with all covenants from 126 contracts via hand-collected data, with 78 contracts from before IFRS adoption and 48 contracts afterward. We find high increases in covenants after adoption. However, this growth is observed only for restrictive security and non-accounting covenants, excluding clauses with accounting multiples. Our results show that IFRS adoption in Brazil shifted incentives and, as a result, shaped a new structure of debt contracts. Our findings complement and expand previous studies and can be useful to academics, regulators and practitioners by showing that the incentives to use accounting figures and ratios shifted in the credit market after IFRS adoption.

International Financial Reporting Standards Implementation
International Financial Reporting Standards Implementation

Author: Mohammad Nurunnabi

Publisher: Emerald Group Publishing

Published: 2021-08-23

Total Pages: 276

ISBN-13: 1801174423

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Contributions to International Accounting aims to address a vital gap in research by focusing on providing relevant and timely studies on International Financial Reporting Standards implementation for local and international policymakers.

Firm Incentives, Institutional Factors and Accounting Quality
Firm Incentives, Institutional Factors and Accounting Quality

Author: Ana Gisbert

Publisher:

Published: 2015

Total Pages: 48

ISBN-13:

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This study examines the role of firm-specific factors that influence the company decision to improve the level of accounting quality after the IFRS adoption. Particularly, we focus on an emerging market economic with an institutional setting characterized by weak governance mechanisms and low-speed institutional changes. The chosen setting allows to contribute with further evidence to the current literature relative to the role of institutional vs. firm-specific factors on reporting incentives and therefore, on the financial reporting decisions. Changing the accounting system is not enough to improve the context of financial opacity across emerging markets, as any new accounting regulation must be simultaneously accompanied by significant institutional changes that strength the enforcement mechanisms in place (Fan et al., 2011, Ball et al., 2000). When these “formal” institutional changes do not take place, companies may be force to establish a firm-specific commitment towards the appropriate enforcement of the new accounting system, in order to obtain the attained benefits of a accounting regulatory change. Consistent with this idea, we look at the impact of a set of firm-specific variables that may affect the financial reporting decision and therefore, the degree of accounting quality. Particularly, we focus a set of variables related to (a) the ownership structure, (b) a set of governance mechanisms: auditor and listing status; (c) the degree of internationalization, and (d) other financial characteristics. The results provide evidence on the relevance of a set of firm-specific characteristics on the level of earnings quality increase. Particularly, internationalization and growth opportunities are clear determinants of increases in earnings quality. Consistent with the previous literature, the ownership concentration reveals as a limiting factor to increases in earnings quality after the IFRS adoption. Finally, the results also suggest the lack of strong oversight and enforcement mechanisms compared to other institutional settings may harm the expected role of the auditors or alternative governance mechanisms such as the capital markets listing categories.

Economic Effects of IFRS Adoption in Brazil
Economic Effects of IFRS Adoption in Brazil

Author: Verônica Santana

Publisher:

Published: 2014

Total Pages: 25

ISBN-13:

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This study aims to identify the impact of IFRS adoption in stock price synchronicity of Brazilian capital market through its influence on how much and in which way firm-specific information is incorporated by stock prices. There are divergences in the literature about how IFRS adoption (specially the mandatory adoption) affects synchronicity in countries with poorer institutions. Our results indicate that IFRS adoption in Brazil has reduced stock price synchronicity and, consequently, increased the efficiency of resource allocation and potential portfolio diversification. These findings support the view that IFRS adoption facilitates firm-specific information flows into the market, improving the informational environment. This findings show that investment conditions in Brazil have improved, opening better opportunities for foreign investments on the country, contributing to financial globalization and market integration.

Full Adoption of IFRS in Brazil
Full Adoption of IFRS in Brazil

Author: Ricardo Menezes Silva

Publisher:

Published: 2014

Total Pages: 45

ISBN-13:

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The purpose of this paper is to investigate the impact of full adoption of IFRS on earnings quality and the cost of equity capital of Brazilian public companies in the period of 2000-2011. Given the multidimensionality of accounting information quality, the portfolio approach was adopted, which is restricted to the analysis of: i) earnings management (EM); ii) conditional conservatism; iii) value relevance; and iv) timeliness. Moreover, assuming an increase in information after full adoption, this contributes to the reduction of asymmetric information in the capital market. A reasonable conjecture is that there will be a reduction in the cost of capital given the more efficient allocation of resources. This empirical study was based on a panel data approach and differences in differences. The sample was defined from the theoretical portfolio IBrX-100, as well as utilizing 30 companies that adopted IFRS in advance. The results show that the hypothesis of an increase in accounting information quality after IFRS full adoption holds true. On the other hand, the models for analyzing the equity cost of capital, based on Li (2010), suggest a reduction in the cost of capital of around 7 basis points for companies that adopted IFRS mandatorily starting in 2010.

Do IFRS Matter in Emerging Countries? An Exploratory Analysis of Brazilian Firms
Do IFRS Matter in Emerging Countries? An Exploratory Analysis of Brazilian Firms

Author: Isabel Lourenço

Publisher:

Published: 2016

Total Pages: 29

ISBN-13:

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This study analyzes the impact of IFRS adoption on earnings management in the emerging country which is probably the most important economy in the world that has adopted IFRS mandatorily, Brazil. We examine the distributions of reported earnings in order to find discontinuities around the zero threshold, before and after IFRS adoption, for a sample of Brazilian listed firms for the period 2004-2011. Our findings provide empirical evidence of discontinuities before, but not after, the adoption of IFRS in Brazil. The results of our study suggest that mandatory adoption of IFRS by Brazilian firms is associated with a decrease in earnings management, mainly during the period of full IFRS adoption (2010-2011).

Mandatory IFRS Adoption in Brazil (2010)
Mandatory IFRS Adoption in Brazil (2010)

Author: Edilene Santana Santos

Publisher:

Published: 2014

Total Pages: 38

ISBN-13:

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We evaluated firms' compliance with required International Financial Reporting Standards (IFRS) disclosure in the first mandatory adoption year of IFRS in Brazil (2010) by comprehensively examining 638 disclosure required items from 28 encompassing IFRSs in the Notes to Financial Statements of all (366) Brazilian non-financial corporations listed on the Brazilian stock exchange (BM&FBovespa). We measured disclosure compliance levels by calculating the respective index, both overall and for each standard, and investigated associations between disclosure levels and firm's characteristics as potential explanatory disclosure compliance factors. Our findings showed overall low levels of disclosure compliance in the analyzed year: the average level of compliance with IFRS required disclosure was very sensitive to the approach employed, varying from 16.04% (strict criterion and dichotomous approach) to 33.72% (tolerant criterion and partial compliance unweighted approach). In line with other countries experience illustrated by the international literature, these results emphasize the importance of increasing institutional support conditions for enhanced enforcement mechanisms, enabling the Brazilian firms to better attain the full economic benefits of IFRS adoption. In all our analyses, company size and “Big 4” auditing were positively associated with the dependent variable, independent of the model employed to determine the compliance disclosure index, making it possible to conclude that these factors produce a significant positive impact on compliance with the IFRS disclosure requirement levels of Brazilian firms.

Value Relevance of IFRS Adoption in Emerging Countries
Value Relevance of IFRS Adoption in Emerging Countries

Author: Aîcha Bleuler

Publisher:

Published: 2016

Total Pages:

ISBN-13:

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This thesis investigates for three emerging countries from the Latin American region - Brazil, Mexico and Chile - the impact of IFRS adoption on accounting quality in terms of value relevance of earnings and book value of equity. Therefore, the institutional setting in Latin America is analyzed profoundly in order to identify country related factors potentially influencing accounting quality. Following, a sample period of four years was defined to examine empirically whether earnings and book value of equity are more value relevant after the mandatory adoption of IFRS in Brazil, Mexico and Chile (H1) and whether earnings and book value of equity are more value relevant under IFRS than under the domestic accounting standard (H2). The Brazilian sample consists of 136 firm year observations between 2008 and 2011, the Mexican sample consists of 128 firm year observations between 2010 and 2013 and the Chilean sample consists of 128 firm year observations between 2007 and 2010. The results obtained using the method of ordinary least square regression suggest that mandatory IFRS adoption increased the value relevance of earnings and book value of equity in Brazil, while for the Mexican and Chilean sample companies this could not be verified. In conclusion, the overall findings of this thesis show that countries from the same geographical region differ greatly with regards to their institutional framework and the effect of IFRS adoption on accounting quality was found to differ among countries in the Latin American area. This highlights the importance of country related institutional factors to be considered in the debate of accounting harmonization.

One Size Fits All? Stakeholders' Perceptions of IFRS Adoption Across Europe and Brazil
One Size Fits All? Stakeholders' Perceptions of IFRS Adoption Across Europe and Brazil

Author: Cristiane Benetti

Publisher:

Published: 2015

Total Pages: 42

ISBN-13:

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The main objective of this study is to put in evidence the perceptions of stakeholders about IFRS adoption across Europe and Brazil. By means of a survey, (816 completed questionnaires, 10% of population), we investigate whether producers (chief financial officers), users (financial analysts), and controllers (auditors) of accounting data share the same views on the usefulness and goals of the international financial reporting process. We use descriptive statistics and univariate tests to analyze the responses to our multiple-choice questions. Results suggest that respondents' activity has less influence on their answers than the country where they are located.