Determinants of Asymmetric Loss Recognition Timeliness in Public and Private Firms in Brazil
36 Pages Posted: 25 Jan 2010 Last revised: 9 Jan 2016
Date Written: January 24, 2010
We investigate the determinants of asymmetric loss recognition timeliness (ALRT) for public and private Brazilian firms. We extend and complement Ball and Shivakumar (2005) by investigating ALRT for private and public firms in Brazil where, unlike in the UK setting, equity markets do not provide the adequate incentives for high quality financial reporting. In Brazil, even the public companies listed on Stock Exchange do not face the same institutional environment of the British firms. Using a unique database of Brazilian public and private firms we document that Brazilian public and private firms present similar ALRT, different from the evidence that Ball and Shivakumar (2005) reported for the UK. We also show that ALRT is not significantly affected by firm’s issuing activity in debt markets, leverage and the presence of covenants.
Keywords: Earnings quality, conservatism, loss recognition, private firms, public leverage, emerging markets, Brazil
JEL Classification: M41, K22, N24
Suggested Citation: Suggested Citation