Economic Effects of IFRS Adoption in Brazil: An Empirical Analysis of Stock Price Synchronicity

25 Pages Posted: 24 Jan 2014

See all articles by Verônica Santana

Verônica Santana

University of Sao Paulo (USP)

Raquel Sarquis

FEA-USP

Isabel Lourenço

Lisbon University Institute (ISCTE-IUL); University of Sao Paulo (USP)

Bruno Salotti

FEA-USP

Fernando Murcia

FEA-USP

Date Written: January 2014

Abstract

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.

Keywords: IFRS, Stock Price Synchronicity, Brazil, Informational Environment

JEL Classification: M41, O16, N26

Suggested Citation

Santana, Verônica and Sarquis, Raquel and Lourenço, Isabel and Salotti, Bruno and Murcia, Fernando, Economic Effects of IFRS Adoption in Brazil: An Empirical Analysis of Stock Price Synchronicity (January 2014). Available at SSRN: https://ssrn.com/abstract=2383363 or http://dx.doi.org/10.2139/ssrn.2383363

Verônica Santana (Contact Author)

University of Sao Paulo (USP) ( email )

Rua Luciano Gualberto, 315
São Paulo, São Paulo 14800-901
Brazil

Raquel Sarquis

FEA-USP ( email )

Av. Prof. Luciano Gualberto 908
São Paulo SP, São Paulo 05508-900
Brazil

Isabel Lourenço

Lisbon University Institute (ISCTE-IUL) ( email )

Complexo Indeg/Iscte
Av. Professor Anibal Bettencourt
Lisbon, 1600-189
Portugal

University of Sao Paulo (USP) ( email )

Brazil

Bruno Salotti

FEA-USP ( email )

Av. Prof. Luciano Gualberto 908
São Paulo SP, São Paulo 05508-900
Brazil

Fernando Murcia

FEA-USP ( email )

Av. Prof. Luciano Gualberto 908
São Paulo SP, São Paulo 05508-900
Brazil

Register to save articles to
your library

Register

Paper statistics

Downloads
389
rank
73,857
Abstract Views
2,187
PlumX Metrics
!

Under construction: SSRN citations will be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information