Iem Accounting: Grupo Televisa's Method Changes

J OF INTERNATIONAL FINANCIAL MANAGEMENT AND ACCOUNTING, Vol 6, No. 3, Winter 1995

Posted: 3 Jul 1998

See all articles by Martin S. Fridson

Martin S. Fridson

Lehmann, Livian, Fridson Advisors LLC

Rock Gao

Cathay Financial Corporation

Abstract

As companies in the international emerging markets (especially Latin America, Eastern Europe and the Asia/Pacific region) begin to issue noninvestment grade corporate bonds in the global financial markets, many are modifying their accounting practices to increase their appeal to investors. Ironically, adoption of a widely known and respected accounting regime can sometimes reduce the conservatism of reported financial results, at least in the short run. At the beginning of 1995, Grupo Televisa, S.A., the Spanish-speaking world's largest media company, implemented the requirement of the Mexican Accounting Principles Commission that it look to International Accounting Standards for guidance on matters not specifically addressed by Mexican GAAP. Two of three resulting changes in financial reporting raised Televisa's reported earnings without increasing cash flow. While there is no indication that Televisa's actions were deliberately misleading, the case study demonstrates that an apparent upgrading of accounting principles is not a panacea for investors.

JEL Classification: M41, L50

Suggested Citation

Fridson, Martin S. and Gao, Rock, Iem Accounting: Grupo Televisa's Method Changes. J OF INTERNATIONAL FINANCIAL MANAGEMENT AND ACCOUNTING, Vol 6, No. 3, Winter 1995. Available at SSRN: https://ssrn.com/abstract=2573

Martin S. Fridson (Contact Author)

Lehmann, Livian, Fridson Advisors LLC ( email )

136 E 57th Street
Suite 501
New York, NY 10022
United States

Rock Gao

Cathay Financial Corporation ( email )

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