Firm-Level Incentives and the Informativeness of Accounting Reports: An Experiment in Brazil

60 Pages Posted: 20 Feb 2008

See all articles by Alexsandro Broedel Lopes

Alexsandro Broedel Lopes

Universidade de São Paulo; Manchester Business School

Martin Walker

University of Manchester - Manchester Business School

Date Written: February 1, 2008

Abstract

We complement recent research (Ball et al. 2003) which suggests that country-level incentives (i.e. legal origin and the level of capital market development) are the main determinants of the quality of financial reporting. Using a newly developed Brazilian Corporate Governance Index (BCGI) we perform an experiment in the poor quality accounting and governance Brazilian environment. We find that superior governance practices at the firm-level and cross-listing have a first-order effect on the informativeness of accounting reports. The earnings quality of Brazilian firms with good governance is similar to the quality previously reported for firms based in common law developed countries.

Keywords: corporate governance, financial accounting, emerging markets, Brazil

JEL Classification: M41, M43, M44, M47, G34, F39

Suggested Citation

Broedel Lopes, Alexsandro and Walker, Martin, Firm-Level Incentives and the Informativeness of Accounting Reports: An Experiment in Brazil (February 1, 2008). Available at SSRN: https://ssrn.com/abstract=1095781 or http://dx.doi.org/10.2139/ssrn.1095781

Alexsandro Broedel Lopes (Contact Author)

Universidade de São Paulo ( email )

Av. Prof. Luciano Gualberto 908
São Paulo, 05508-900
Brazil
+55 11 3091 5820 (Phone)
+55 11 3813 0120 (Fax)

Manchester Business School

Booth Street West
Manchester, M15 6PB
United Kingdom

Martin Walker

University of Manchester - Manchester Business School ( email )

Booth Street West
Manchester, M15 6PB
United Kingdom

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