Accounting Information Quality of Latin America Firms: The Role of Regulatory Environment

Revista Evidenciação Contábil & Finanças, 2019

34 Pages Posted: 12 Jun 2019

See all articles by Cinthya Morais

Cinthya Morais

Federal University of Ceara

Karla Vanessa Nogueira Maia Amorim

Centro Universitário Fanor Wyden

Dante Viana Jr.

ISCTE-IUL University Institute of Lisbon

Sylvia Domingos

Federal University of Ceara

Vera Ponte

Universidade Federal do Ceará

Date Written: May 28, 2019

Abstract

This study aims to investigate the relationship between the regulatory environment and the quality of the accounting information of Latin America companies, specifically regarding earnings management through accruals. The study sample is comprised of companies listed on the main stock exchanges in Latin America (Brazil, Chile, Mexico and Peru), according to the availability of information in the Capital IQ database – the main data source for this study – and that adopted IFRS as the basis for preparing their financial statements in the period analyzed (2011 to 2016), thus totaling 2,360 firm-year observations. Considering the absolute value of discretionary accruals as proxy for earnings management, our results suggest a positive relationship between the regulatory environment and earnings management. Our results also indicate that the regulatory environment is positively related to the use of discretionary accruals for companies in Brazil, Peru, Mexico, and considering Latin America as a whole. For Chile, we don’t find any significant relationship between these factors, suggesting that there are aspects related to the country level, whether economic, cultural, or institutional, that were not mentioned by this study and that are possibly able to influence the use of discretionary accruals as a form of earnings management.

Keywords: Regulatory environment, information quality, earnings management, discretionary accruals, Latin America

Suggested Citation

Morais, Cinthya and Nogueira Maia Amorim, Karla Vanessa and Viana Jr., Dante and Domingos, Sylvia and Ponte, Vera, Accounting Information Quality of Latin America Firms: The Role of Regulatory Environment (May 28, 2019). Revista Evidenciação Contábil & Finanças, 2019, Available at SSRN: https://ssrn.com/abstract=3395477

Cinthya Morais

Federal University of Ceara ( email )

Rua Papi Júnior 1225 - Rodolfo Teófilo
Fortaleza, Ceara 60431970
Portugal

Karla Vanessa Nogueira Maia Amorim

Centro Universitário Fanor Wyden ( email )

R. Antônio Gomes Guimarães, 150 - Papicu
Fortaleza, Ceará 60191-195
Brazil
85999962235 (Phone)
60833-075 (Fax)

HOME PAGE: http://https://wyden.com.br/unifanor

Dante Viana Jr. (Contact Author)

ISCTE-IUL University Institute of Lisbon ( email )

Avenida Forcas Armadas
Lisbon, 1649-026
Portugal

Sylvia Domingos

Federal University of Ceara ( email )

Rua Papi Júnior 1225 - Rodolfo Teófilo
Fortaleza, Ceara 60431970
Portugal

Vera Ponte

Universidade Federal do Ceará ( email )

Av da Universidade 2486
Fortaleza, Ceará 60160080
Portugal

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