The Impact of the Adoption of International Financial Reporting Standards on the Quality of Accounting Information of the Brazilian and European Public Firms

16 Pages Posted: 28 May 2013 Last revised: 19 Jun 2013

See all articles by Edilson Paulo

Edilson Paulo

Federal University of Santa Catarina

Felipe Pontes

TC; TC Matrix; Azure Investments

David Carter

University of Roehampton

Rodrigo de Souza

University of Roehampton - Social Sciences

Date Written: May 27, 2013

Abstract

Several factors affect the quality of accounting information, such as characteristics of the firm, practices and procedures adopted in the elaboration of the financial statements, corporative governance system, capital market, regulation, among others. Among these factors, it is noteworthy the influence of the accounting standards about the quality of the numbers reported by the firms. Since 2005, the European companies elaborated their consolidated financial statements according to the International Financial Reporting Standards (IFRS), while in Brazil, the process of convergence of national accounting standards to IFRS was promoted just after the approval of the Law nº 11.638/07, therefore, after that, the Comitê de Pronunciamentos Contábeis (CPC) approved various Technical Pronouncements which aimed to facilitate the convergence of Brazilian accounting standards to these international rules. Considering that these international accounting standards have a higher quality, it is expected that the IFRS adoption affect positively accounting information quality. Thus, this research aims to analyze the effect of the IFRS adoption in the earnings quality reported by the Brazilian and European public firms, in the period between 2000 and 2011, considering that previous research did not showed a consensus about this topic. Empirical technical models, such as persistence, conservatism, earnings management and accruals errors, were used to reach the proposed objective. The results showed that the quality of accounting information has not significantly improved comparing the period before and after the adoption of the IFRS in Brazil or Europe.

Keywords: Quality of accounting information, International Financial Reporting Standards, Conservatism, Accruals, Earnings management

JEL Classification: C50, M41

Suggested Citation

Paulo, Edilson and Pontes Girão, Luiz Felipe de Araújo and Carter, David and de Souza, Rodrigo, The Impact of the Adoption of International Financial Reporting Standards on the Quality of Accounting Information of the Brazilian and European Public Firms (May 27, 2013). Available at SSRN: https://ssrn.com/abstract=2270678 or http://dx.doi.org/10.2139/ssrn.2270678

Edilson Paulo

Federal University of Santa Catarina ( email )

Florianopolis, Santa Catarina 88040-970
Brazil

Luiz Felipe de Araújo Pontes Girão (Contact Author)

TC ( email )

Rua Leopoldo Couto Magalhães Júnior
São Paulo, 04542000
Brazil

HOME PAGE: http://www.tc.com.br

TC Matrix ( email )

Rua Leopoldo Couto Magalhães Júnior
São Paulo, 04542000
Brazil
+55 4003-6048 (Phone)

HOME PAGE: http://www.tc.com.br/matrix

Azure Investments ( email )

João Pessoa
Brazil

David Carter

University of Roehampton ( email )

Roehampton Lane
London, SW15 5PU
United Kingdom

Rodrigo De Souza

University of Roehampton - Social Sciences ( email )

United Kingdom

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