Impact of Convergence to International Accounting Standards in Brazil on The Informational Content of Accounting

17 Pages Posted: 17 Mar 2014

See all articles by Marcelo Alvaro Macedo

Marcelo Alvaro Macedo

Universidade Federal do Rio de Janeiro (UFRJ)

Marcio Andre Veras Machado

Federal University of Paraiba (UFPB)

Márcia Machado

Federal University of Paraiba (UFPB)

Pedro Henrique Cardoso Mendonça

Universidade Federal do Rio de Janeiro (UFRJ)

Date Written: March 14, 2014

Abstract

This article investigates the impact of the process of convergence to international accounting standards in Brazil on the informational content of accounting, focused on the changes in the main accounting and financial ratios and on the relevance of accounting information. For this purpose, we analyzed publicly traded nonfinancial companies, considering information for 2009, disclosed at the start of 2010 (BRGAAP – partial IFRS) and for the same year, disclosed at the start of 2011 (full IFRS). The purpose of analyzing the data for 2009 was to isolate any other influence found in the accounting statements that did not come from the alteration in accounting standards. The results indicate that the indicators Indebtedness (DEBT), Asset Turnover (AT), Gross Margin (GM), Operating Cash Flow over Total Assets (OPCFA) and Operating Cash Flow over Stockholders’ Equity (OPCFE) are lower in the financial statements prepared according to full IFRS. Analysis of the informational capacity of Net Income by means of regression allowed detecting that Net Income has higher explanatory power of the behavior of stock prices under full IFRS. With respect to the informational content of Stockholders’ Equity, the results indicate no significant change in explanatory power on the behavior of stock prices.

Keywords: IFRS, informational content of accounting, convergence to international accounting standards, accounting ratios

JEL Classification: M41

Suggested Citation

Macedo, Marcelo Alvaro and Machado, Marcio Andre Veras and Machado, Márcia and Cardoso Mendonça, Pedro Henrique, Impact of Convergence to International Accounting Standards in Brazil on The Informational Content of Accounting (March 14, 2014). Available at SSRN: https://ssrn.com/abstract=2409399 or http://dx.doi.org/10.2139/ssrn.2409399

Marcelo Alvaro Macedo

Universidade Federal do Rio de Janeiro (UFRJ) ( email )

Av; Pasteur, 250
terreo - Bairro Maracana
Rio de Janeiro, Rio de Janeiro 23890000
Brazil

Marcio Andre Veras Machado (Contact Author)

Federal University of Paraiba (UFPB) ( email )

Centre for Applied Social Sciences
Graduate School of Management
João Pessoa, Paraiba
Brazil

Márcia Machado

Federal University of Paraiba (UFPB) ( email )

Cidade Universitária
s/n - Castelo Branco III
João Pessoa, Paraiba 58297-000
Brazil

Pedro Henrique Cardoso Mendonça

Universidade Federal do Rio de Janeiro (UFRJ) ( email )

Av; Pasteur, 250
terreo - Bairro Maracana
Rio de Janeiro, Rio de Janeiro 23890000
Brazil

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