O IASB: Das Informações Contábeis de Alta Qualidade em Direção às Informações para Fomentar Confiança e Estabilidade nos Mercados Globais

ID: 39208

Authors: Ann Jorissen.

Source: Revista Contabilidade & Finanças, v. 26, n. 69, p. 0-0, September-December, 2015. 1 page(s).

Document type: Editorial (Portuguese)

Editorial

ID: 39207

Authors: Fábio Frezatti.

Source: Revista Contabilidade & Finanças, v. 26, n. 69, p. 241-242, September-December, 2015. 2 page(s).

Document type: Editorial (Portuguese)

Avoiding Reporting Losses: An Empirical Study of Earnings Management via Operating Decisions

ID: 39209

Authors: Elizio Marcos dos Reis, Wagner Moura Lamounier, Valéria Gama Fully Bressan.

Source: Revista Contabilidade & Finanças, v. 26, n. 69, p. 247-260, September-December, 2015. 14 page(s).

Keyword: earnings management , operating decisions , panel data

Document type: Article (Portuguese) Show Abstract

The aim of this paper is to verify whether Brazilian companies listed on the BM&FBOVESPA used earnings management via operating decisions, when faced with reporting unfavourable results, in order to avoid disclosing losses. Using panel data covering years from 2008 to 2013 in estimated regression models, the paper focuses on three ways of manipulating financial results through operational decisions: by manipulating sales; by reducing selling, general and administrative expenses (SG&A); and by increasing production to report lower costs of goods sold. The results show that the companies did use SG&A to avoid reporting losses, but did not manipulate sales or levels of production for such purposes. The evidence presented suggests that in Brazil managers are only able to manipulate operational activities by reducing operating expenses (SG&A), probably due a lack of flexibility in the production process and the cash flow constraints faced by Brazilian companies. From a users’ perspective, this paper finds that companies do use earnings management via operating decisions to avoid disclosing losses to capital markets, which is consistent with the Prospect Theory

Determinants of Audit Fees: a Study in the Companies Listed on the BM&FBOVESPA, Brazil

ID: 39210

Authors: Walther Bottaro de Lima Castro, Ivam Ricardo Peleias, Glauco Peres da Silva.

Source: Revista Contabilidade & Finanças, v. 26, n. 69, p. 261-273, September-December, 2015. 13 page(s).

Keyword: audit expenses , audit fees , Big N

Document type: Article (Portuguese) Show Abstract

This paper analyzes the determinants of audit fees paid by companies listed on the BM&FBOVESPA. Data referring to listed companies for 2012 show a positive relationship between fees and the variables size, client’s complexity, and Big N auditors. The risk perceived by the auditor demonstrated to affect the values of fees differently in larger and smaller clients. In smaller clients, the results suggest that the auditor charges lower fees to more leveraged and riskier clients, contrary to the hypothesis that the auditor might charge higher fees as a reward for his risk. In turn, in larger clients, the results demonstrate that clients with higher risk, as measured by liquidity and leverage, or those having stronger governance practices, tend to spend more on auditing. As for changing the auditor, the results pointed out that larger clients pay less in the first year of audit. These results qualify the findings of Hallak and Silva (2012), suggesting the need for further research with temporally more extensive bases.

Accounting Choices: The Brazilian Case Of Real Estate Investment

ID: 39212

Authors: Murillo José Torello Pinto, Vinícius Aversari Martins, Denise Mendes da Silva.

Source: Revista Contabilidade & Finanças, v. 26, n. 69, p. 274-289, September-December, 2015. 16 page(s).

Keyword: accounting choices , business model , investment properties

Document type: Article (Portuguese) Show Abstract

The objective in this study is to show that the business model of publicly traded real estate management companies in the Brazilian market explains their accounting choices to measure the investment properties. Therefore, the five main Brazilian investment property managers were studied, based on a method that triangulated documentary research, semistructured interviews and consistency analysis. The results of the analysis of the secondary data from the documentary research of the two main Brazilian companies in the real estate exploitation sector (one of which chose the fair value and the other the cost), together with the results of the interviews with the companies’ main internal and external agents direct or indirectly involved in the measuring choices of investment properties, indicated that the companies’ distinguished business model explains their distinct accounting choices to measure the investment properties. To enhance the consistency of these findings, next, the business models of the three consecutive largest Brazilian investment property managers were analyzed (two of which chose the fair value and one the cost), confronting them with their accounting choices; consistency was observed between the business models and the accounting choices, in accordance with earlier results. Although generalization of the results is not possible due to the small number of companies studied and the specific sector, evidence indicates that an integrated set of factors, which are considered in isolation in the literature, can explain the accounting choices. Several mutually interacting factors that explain the accounting choices, to the detriment of isolated factors, can contribute to expand the knowledge on this theme.

Unexpected Earnings, Stock Returns, and Risk in the Brazilian Capital Market

ID: 39213

Authors: Renê Coppe Pimentel.

Source: Revista Contabilidade & Finanças, v. 26, n. 69, p. 290-303, September-December, 2015. 14 page(s).

Keyword: accounting earnings , earnings response coefficient , emerging markets , risk

Document type: Article (Portuguese) Show Abstract

This article analyzes the role of risk in the earnings response coefficient (ERC) in the Brazilian capital market. Since ‘risk’ may be measured in various ways and it can vary systematically according to the conditions under analysis, empirical studies have reported conflicting evidence with regard to the role of risk in the ERC. The empirical study is based on annual data from a sample of 212 companies listed on the Brazilian Securities, Commodities, and Futures Exchange (BM&FBOVESPA), within the period from 1995 to 2013. The analysis takes into account longitudinal data and various measurements of unexpected earnings, risk, and several control variables. The results suggest that the earnings-return relationship is negatively affected by total risk and nonlinear effects of unexpected earnings and it is positively affected by earnings persistence. The analysis failed to indicate any significant association between the ERC and systematic risk and it failed to provide evidence that the full adoption of the International Financial Reporting Standards (IFRS), in 2010, affected the way how the market reacts to surprises in the disclosure of accounting earnings. In order to analyze the earnings-return relationship, classifying companies by the total risk ranking showed better results in terms of distinguishing high and low-risk companies. This article contributes to the accounting literature in emerging markets by reporting that controlling the earnings-return relationship through total risk, nonlinear effects, and earnings persistence may optimize financial analysis and the companies’ assessment process.

Adoption of the International Accounting Standard by Small and Medium-Sized Entities and its Effects on Credit Granting

ID: 39214

Authors: Enrico Dalla Riva, Bruno Meirelles Salotti.

Source: Revista Contabilidade & Finanças, v. 26, n. 69, p. 304-316, September-December, 2015. 13 page(s).

Keyword: accounting standards and statements , banking credit , disclosure of financial information , small and medium-sized entities

Document type: Article (Portuguese) Show Abstract

This research examines the relationship between the adoption of the international accounting standard by small and medium-sized entities in Brazil and the cost of credit granted by financial institutions. The literature about this subject discusses accounting regulation as a response to the existence of environments having information asymmetry and the Disclosure Theory studies the phenomenon of accounting disclosure, from the viewpoint of its causes and effects. The International Accounting Standards Board (IASB) suggests that an accounting standard with higher information quality tends to reduce the funding cost for small enterprises and, thus, this paper has as its main aim investigating whether the adoption of the international accounting standard has caused some effect on the cost of banking credit. The investigation was conducted through a theoretical and empirical approach, where the statistical analyses involved a sample of 179 enterprises subject to the Brazilian Technical Pronouncement – Accounting for Small and Medium-Sized Entities (CPC-SMEs), which underwent descriptive analysis, sample means testing, panel data analysis, and quantile regressions, with data from financial statements for three years (2009 to 2011). Evidence suggests a weak association between measures of the accounting information quality (disclosure and exposure of the adoption of the accounting standard based on the CPC) and the cost of banking credit for these enterprises. However, such evidence did not prove to be consistent over time and, furthermore, through regression analysis, the variables were not significant. So, it is possible to observe only a slight influence of accounting information in the sector under analysis, at least at this very first moment of changes in the accounting standards, on the cost of banking credit. Thus, this study contributes to examine the relationship between accounting information quality and the cost of banking credit among small and medium-sized entities.

Information Asymmetry and Share Prices: Analysis of the Use of Social Networks in the Brazilian and U.S. Capital Markets

ID: 39216

Authors: Marcelo Paulo de Arruda, Luiz Felipe de Araújo Pontes Girão, Wenner Glaucio Lopes Lucena.

Source: Revista Contabilidade & Finanças, v. 26, n. 69, p. 317-330, September-December, 2015. 14 page(s).

Keyword: information asymmetry , pricing of shares , social networks

Document type: Article (Portuguese) Show Abstract

Increasing globalization has meant the internet becoming ever more part of the routine of people around the world. With the evolution of the internet, social networks have emerged in order to facilitate communication between people, communities and even between corporations. Social networks offer companies a way of instantly releasing information, allowing those who use this information greater flexibility when searching for news about the companies in which they have invested or wish to invest. In this context, the objective of this study was to analyze how social networks (Facebook, Twitter and Youtube) affect levels of information asymmetry and the pricing of shares for Brazilian and U.S. public companies during 2012. To achieve the proposed goal, the conceptual framework of the Ohlson model (1995) was used to verify whether the information posted on social networks affects the pricing of shares, and share price volatility was used as a proxy for information asymmetry. The sample included 170 Brazilian companies listed on the BM&FBOVESPA and 100 companies listed on the U.S. stock market in 2012. The results show that social networks can affect levels of information asymmetry in these markets, but only "unofficial" Facebook affects the pricing of shares for companies in the Brazilian stock market, although sensitivity analysis indicated that the groups that use and those that do not use Facebook do not exhibit different average returns. Thus, investors should not use this information to devise strategies to generate better returns.

Capital structure: the role of the funding sources on which Brazilian listed companies are based

ID: 39217

Authors: Wilson Tarantin Junior, Mauricio Ribeiro do Valle.

Source: Revista Contabilidade & Finanças, v. 26, n. 69, p. 331-344, September-December, 2015. 14 page(s).

Keyword: BNDES , capital structure , funding sources , institutional factors

Document type: Article (Portuguese) Show Abstract

This study evaluated the capital structure of Brazilian listed companies, within the period from 2005 to 2012, verifying the role of the funding sources on which such companies are based. To do this, the debt ratio in 3 different sources was evaluated: financial institutions, capital market, and sources with subsidized interest rates, the latter representing an institutional factor of the Brazilian economy. A sample of 95 companies was used, out of the 150 largest companies listed on the São Paulo Securities, Commodities, and Futures Exchange (BM&FBOVESPA). By using models with panel data, the results show that the funding sources impact on the companies’ capital structure formation, influencing both in leverage and in debts maturity. Regarding leverage, companies that have a higher proportion of their funds raised in the capital market are more leveraged. The same is not true for companies that have a higher proportion of subsidized resources. Regarding debts maturity, resources of different maturities are obtained from different sources: the resources of lower maturities are obtained from financial institutions and the resources of higher maturities are obtained from the capital market and sources with subsidized interest rates – i.e. the Brazilian National Bank for Economic and Social Development (BNDES). Comparing the resources from the capital market to subsidized resources, it is concluded that the former have higher maturity. Such a result may be explained by the growth of the Brazilian capital market in recent years, since 2009, so that companies have been based on the capital market for their funding with higher maturity and on subsidized resources, from BNDES, for their funding with intermediate maturities.

Basel III: Impact on Banks in Brazil

ID: 39218

Authors: Fernando Antonio Perrone Pinheiro, José Roberto Ferreira Savoia, José Roberto Securato.

Source: Revista Contabilidade & Finanças, v. 26, n. 69, p. 345-361, September-December, 2015. 17 page(s).

Keyword: bank regulation , banks , Basel III , regulatory capital , risk-weighted assets

Document type: Article (Portuguese) Show Abstract

This article evaluates the potential impacts deriving from the change in required capital of banks in Brazil, with the implementation of Basel III. To do this, a sample of 58 banks was used, which accounts for 80% of the assets in the Brazilian National Financial System, according to the balance sheets of December 2012. The methodology adopted has simulated the need for regulatory capital that will be mandatory in the end of the transition period, in 2019, considering the continuity of risk-weighted assets (RWAs) contained in these financial statements. Assuming that some banks will resort to the capital market to raise their capitalization level, the return on equity (ROE) for the previous three years was analyzed, compared to the cost of equity, estimated by the International Capital Asset Pricing Model (ICAPM). It was found that 23 institutions had some kind of noncompliance with the new regulatory capital, among them the 3 largest federal public banks. It was also observed that 39 banks have a ROE insufficient to attract new investors. The joint analysis of the adequacy of capital structure and the return level may identify occasional vulnerabilities. It is concluded that implementing Basel III in Brazil may increase the search for greater efficiency and profitability. In a future scenario, the Brazilian banking system may observe a wave of mergers and acquisitions and an increased number of initial public offerings (IPOs).

Determinants of Financial Literacy: Analysis of the Influence of Socioeconomic and Demographic Variables

ID: 39220

Authors: Ani Caroline Grigion Potrich, Kelmara Mendes Vieira, Guilherme Kirch.

Source: Revista Contabilidade & Finanças, v. 26, n. 69, p. 362-377, September-December, 2015. 16 page(s).

Keyword: demographic variables , financial literacy , forecasting models , socioeconomic variables

Document type: Article (Portuguese) Show Abstract

Financial literacy helps individuals make more assertive and efficient decisions in the monetary context of their lives. This study has as its central axis developing a model that explains the individuals’ financial literacy level through socioeconomic and demographic variables. The sample consists of 1,400 individuals living in Rio Grande do Sul, Brazil, and data analysis was performed by using descriptive statistics and multivariate analysis techniques. As an indicator of the financial literacy level, a measure with three constructs was adopted: financial attitude, financial behavior, and financial knowledge. Logit and probit models were estimated from these explanatory variables: gender, marital status, dependent family members, occupation, age, educational level, father’s educational level, mother’s educational level, individual income, and family income. Marginal effects (incremental propensity) were positive and statistically significant at the usual levels for these variables: gender (9.56%), educational level (2.54%), individual income (6.32%), and family income (3.73%). The marginal effects (incremental propensities) were negative and statistically significant for the dummy dependent family members (-7.51%), indicating that men who do not have dependent family members and have higher educational and both individual income and family income levels are those who are more likely to belong to the group with high financial literacy levels. Furthermore, it was found that most respondents (67.1%) were classified as having a low financial literacy level. These findings confirm the urgency and need for devising effective actions to minimize the issue of financial illiteracy. It is particularly suggested that major efforts are undertaken to achieve women having dependent family members and low educational and income levels. Such a study is justified by the need to create a model that allows identifying the Brazilians’ financial literacy level from socioeconomic and demographic variables. This identification may be useful, for instance, in assisting the various economic player to design financial strategies and products suitable to the customers profile. From the government viewpoint, it may enable, for instance, identifying the most vulnerable groups and thus focus on actions to improve the financial literacy level of these specific groups.