Mandatory IFRS Adoption in Brazil (2010): Index of Compliance with Disclosure Requirements and Explanatory Factors of Firms Reporting

Santos, E. S.; Ponte, V. M. R.; Mapurunga, P. V. Mandatory IFRS Adoption in Brazil (2010): Index of Compliance with Disclosure Requirements and Explanatory Factors of Firms Reporting. Revista Contabilidade e Finanças, 2014. Forthcoming

38 Pages Posted: 17 Aug 2013 Last revised: 18 Aug 2014

See all articles by Edilene Santana Santos

Edilene Santana Santos

Fundacao Getulio Vargas (EAESP); Getulio Vargas Foundation (FGV) - Sao Paulo School of Business Administration

Vera Ponte

Universidade Federal do Ceará

Patricia Mapurunga

Independent

Date Written: January 5, 2013

Abstract

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.

Keywords: compliance, mandatory disclosure, explanatory factors, IFRS, Brazil

JEL Classification: M40, M41

Suggested Citation

Santos, Edilene Santana and Ponte, Vera and Mapurunga, Patricia, Mandatory IFRS Adoption in Brazil (2010): Index of Compliance with Disclosure Requirements and Explanatory Factors of Firms Reporting (January 5, 2013). Santos, E. S.; Ponte, V. M. R.; Mapurunga, P. V. Mandatory IFRS Adoption in Brazil (2010): Index of Compliance with Disclosure Requirements and Explanatory Factors of Firms Reporting. Revista Contabilidade e Finanças, 2014. Forthcoming. Available at SSRN: https://ssrn.com/abstract=2310625 or http://dx.doi.org/10.2139/ssrn.2310625

Edilene Santana Santos (Contact Author)

Fundacao Getulio Vargas (EAESP) ( email )

Avenida Nove de Julho, 2029.
Sao Paulo - SP, 01.313.902
Brazil

HOME PAGE: http://eaesp.fgvsp.br/

Getulio Vargas Foundation (FGV) - Sao Paulo School of Business Administration ( email )

Sao Paulo
BRAZIL

Vera Ponte

Universidade Federal do Ceará ( email )

Av da Universidade 2486
Fortaleza, Ceará 60160080
Portugal

Patricia Mapurunga

Independent ( email )

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