Iem Accounting: Grupo Televisa's Method Changes
J OF INTERNATIONAL FINANCIAL MANAGEMENT AND ACCOUNTING, Vol 6, No. 3, Winter 1995
Posted: 3 Jul 1998
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: Suggested Citation