Editorial

ID: 40588

Authors: Fábio Frezatti.

Source: Revista Contabilidade & Finanças, v. 27, n. 70, p. 5-6, January-April, 2016. 2 page(s).

Document type: Editorial (Portuguese)

O Relato Ético das Mensurações de Desempenho Não Consideradas no GAAP

ID: 40589

Authors: Ervin L. Black.

Source: Revista Contabilidade & Finanças, v. 27, n. 70, p. 7-11, January-April, 2016. 5 page(s).

Document type: Editorial (Portuguese)

Manager’s Discretionary Power and Comparability of Financial Reports: An Analysis of the Regulatory Transition Process in Brazilian Accounting

ID: 40590

Authors: Alex Mussoi Ribeiro, Carlos Henrique Silva do Carmo, Luiz Paulo Lopes Fávero, L. Nelson Carvalho.

Source: Revista Contabilidade & Finanças, v. 27, n. 70, p. 12-28, January-April, 2016. 17 page(s).

Keyword: comparability , International Financial Reporting Standards , principles , regulation , rules

Document type: Article (Portuguese) Show Abstract

This research aimed to directly evaluate the impact of the accounting regulatory flexibility movement on the comparability of financial reports. The country chosen for the analysis was Brazil, because it was one of the few countries in the world where a process of regulatory change from a completely rule-based standard with a strong link to tax accounting (Lopes, 2011) to a principle-based standard with greater need for decision by managers who prepare the financial reports took place. To measure comparability, the accounting function similarity model developed by DeFranco, Kothari and Verdi (2011) was used. The companies analyzed were all listed ones with full data for the period concerned having, at least, a pair company within the same economic activity sector. To obtain the research results, we adopted a panel data model where the years 2005 to 2012 were compared to the year 2004. The results obtained prove that, on average, there was no significant decrease in the comparability level within country during the regulatory transition period in Brazil. On the contrary, there was an increase in genuine comparability in the year 2012 when compared to 2004. In the model adjusted by stepwise, the years 2011 and 2012 had a significantly higher average comparability when compared to 2004. The results found corroborate other researches addressing the quality of accounting information (Collins, Pasewark, & Riley, 2012; Psaros & Trotman, 2004; Agoglia, Doupnik, & Tsakumis, 2011) and prove the superiority of the principle-based standard also over the comparability of financial reports. The main conclusion of this research is that increasing manager’s discretionary power through flexibility of accounting standards does not decrease the comparability of financial reports.

The Relevance of the Informational Content of Book-Tax Differences for Predicting Future Income: Evidence from Latin American Countries

ID: 40591

Authors: Alessandra Vieira Cunha Marques, Patrícia de Souza Costa, Pablo Rogers Silva.

Source: Revista Contabilidade & Finanças, v. 27, n. 70, p. 29-42, January-April, 2016. 14 page(s).

Keyword: book-tax differences , Latin America , relevance of accounting numbers

Document type: Article (Portuguese) Show Abstract

This study aims to investigate whether the different types of book-tax differences are useful for predicting the future income of publicly traded companies in five Latin American countries. This is possible since these differences convey information about transitory components of income, which can be used by investors for predicting future income. However, little is known about the relationship between tax variables and companies’ future results. The sample analyzed here is composed of 580 publicly traded companies from five Latin American countries (Argentina, Brazil, Chile, Mexico, and Peru) with information available in the Economatica® database covering 2002 to 2013. In terms of methodology, regressions are employed in order to find a connection between the different types (total, permanent, temporary, and the negative and positive variations) of book-tax differences and companies’ current and future earnings per share, as well as some control variables suggested by previous literature. The model’s coefficients were estimated through panel data techniques: fixed effects. The results obtained suggest that the information gathered in the different types of book-tax differences (total, permanent, temporary, positive and negative variations) is relevant in predicting future income. Total, permanent and temporary differences contribute to the uncertainty in future income prediction, given that results are more transitory and less persistent in years with higher book-tax differences. Positive and negative variations, on the other hand, attribute higher income in coming years to greater variations in book-tax differences, representing increased timeliness of results and a reduction in off balance sheet funding for the publicly traded companies from these countries.

Taxation of Insolvent Companies: Empirical Evidence in Portugal

ID: 40592

Authors: Ana Cristina dos Santos Arromba Dinis, Cidália Maria da Mota Lopes, Alexandre Miguel Fernandes Gomes da Silva, Pedro Miguel de Jesus Marcelino.

Source: Revista Contabilidade & Finanças, v. 27, n. 70, p. 43-54, January-April, 2016. 12 page(s).

Keyword: insolvency , Portuguese tax on revenue of legal entities , taxation

Document type: Article (Portuguese) Show Abstract

This article discusses the issue of taxation of insolvent companies in Portugal, particularly regarding the Portuguese tax on revenue of legal entities (IRC). For this purpose, first, some considerations on the legal framework of insolvent companies are woven and, second, their tax regime is analyzed. Then, a brief review of the main studies that, in the international context, analyze and debate major issues derived from the tax regime of insolvent companies is conducted, particularly in Brazil, Spain, United States, and Italy. Finally, there are the results of an empirical study conducted in Portugal, in 2013, which evaluates and compares the opinions of insolvency administrators (IA), the tax and customs authority (TA), and court magistrates (CM), in order to contribute to a better solution concerning business taxation under this regime. Respondents (IA, TA, CM) demonstrate objective thinking about the fact they believe it is very important that the Portuguese Code of Insolvency and Business Recovery (CIRE) and the Portuguese Code of Tax on Revenue of Legal Entities (CIRC) are modified, now to make clear whether the settlement of property ownership of an insolvent estate is liable to the IRC, then to assign a chapter specifically devoted to the subject of taxation on insolvency in Portugal.

The Relationship Between Board Interlocking and Income Smoothing Practices

ID: 40593

Authors: Flávio Ribeiro, Romualdo Douglas Colauto.

Source: Revista Contabilidade & Finanças, v. 27, n. 70, p. 55-66, January-April, 2016. 12 page(s).

Keyword: board interlocking , income smoothing , social network analysis

Document type: Article (Portuguese) Show Abstract

This study aims to investigate the influence of board interlocking in income smoothing practices in public companies with shares traded on the BM&FBOVESPA. To achieve this objective we adopted a sample comprised of 58 Brazilian companies included in the Bovespa index. The study is classified as empirical and analytical and uses as a proxy for income smoothing a metric called the “smoothing factor” (SF), obtained through the factor analysis technique using the metrics EM1 and EM3 from Leuz, Nanda and Wysocki (2003). As independent variables we employed indicators of social network analysis. From a theoretical point of view, the study is relevant and innovates in making the connection between the resource dependence theory, the agency theory and board interlocking. In practical terms, the study shows the effects of the constitutive elements of corporate social networks, arising from the board interlocking structure, on income smoothing accounting practices. Regression with panel data using fixed effects showed that the constituent elements of corporate social networks tend to influence the practice of smoothing in the sample used. The results of the study show that companies that share board members with other organizations which smooth their results tend to adopt this organizational practice more easily, which can be explained by: (i) companies causing variations in performance due to operational decisions or financial reporting choices; and (ii) managers making use of discretionary practices in the reporting of profits.

The Earnings/Price Risk Factor in Capital Asset Pricing Models

ID: 40594

Authors: Rafael Falcão Noda, Roy Martelanc, Eduardo Kazuo Kayo.

Source: Revista Contabilidade & Finanças, v. 27, n. 70, p. 67-79, January-April, 2016. 13 page(s).

Keyword: Cost of equity, Asset pricing, Multi-factor models

Document type: Article (Portuguese) Show Abstract

This article integrates the ideas from two major lines of research on cost of equity and asset pricing: multi-factor models and ex ante accounting models. The earnings/price ratio is used as a proxy for the ex ante cost of equity, in order to explain realized returns of Brazilian companies within the period from 1995 to 2013. The initial finding was that stocks with high (low) earnings/price ratios have higher (lower) risk-adjusted realized returns, already controlled by the capital asset pricing model’s beta. The results show that selecting stocks based on high earnings/price ratios has led to significantly higher risk-adjusted returns in the Brazilian market, with average abnormal returns close to 1.3% per month. We design asset pricing models including an earnings/price risk factor, i.e. high earnings minus low earnings, based on the Fama and French threefactor model. We conclude that such a risk factor is significant to explain returns on portfolios, even when controlled by size and market/book ratios. Models including the high earnings minus low earnings risk factor were better to explain stock returns in Brazil when compared to the capital asset pricing model and to the Fama and French three-factor model, having the lowest number of significant intercepts. These findings may be due to the impact of historically high inflation rates, which reduce the information content of book values, thus making the models based on earnings/price ratios better than those based on market/book ratios. Such results are different from those obtained in more developed markets and the superiority of the earnings/price ratio for asset pricing may also exist in other emerging markets.

Contingent Convertibles and their Impacts on the Optimization of the Capital Structure of Brazilian Banks Under Basel III

ID: 40595

Authors: Karina Cyganczuk Goes, Hsia Hua Sheng, Rafael Felipe Schiozer.

Source: Revista Contabilidade & Finanças, v. 27, n. 70, p. 80-97, January-April, 2016. 18 page(s).

Keyword: Basel III , contingent convertibles , regulatory capital

Document type: Article (Portuguese) Show Abstract

Banks around the world maintain excess regulatory capital, whether to minimize capitalization costs or to mitigate risks of financial difficulties. However, it was only after the financial crisis of 2008 that the quality of capital gained greater importance among international regulators, through the Third Basel Accord (Basel III), which suggested a capital structure formed of the new equity and debt hybrid instruments, that is, Contingent Convertibles (CoCos), which have the main goal of recapitalizing banks automatically when they show signs of financial difficulties. Using the continuous-time structural model developed by Koziol and Lawrenz (2012), with December 2013 as a reference, this paper analyzes the capital structure of the 10 biggest Brazilian banks in terms of total assets, comparing their current structures - with only subordinated debts - with the structure proposed in Basel III, composed solely of contingent convertibles, with a view to verifying the influence of CoCos in banks’ risks and evaluating the effectiveness of this Basel III recommendation. Through the evidence obtained using the model mentioned, this paper’s main contribution is in demonstrating that the use of CoCos would optimize the capital structure of banks under the restrictions of Basel III, considering these are effective. If not, the automatic recapitalization of these instruments could be used for shareholders’ own benefit, thus increasing the likelihood of banks experiencing financial difficulties, which could cause a new financial crisis, like that which occurred in 2008.

Effects of Idiosyncratic Volatility in Asset Pricing

ID: 40631

Authors: André Luis Leite, Antonio Carlos Figueiredo Pinto, Marcelo Cabus Klotzle.

Source: Revista Contabilidade & Finanças, v. 27, n. 70, p. 98-112, January-April, 2016. 15 page(s).

Keyword: asset pricing , expected returns , idiosyncratic volatility , price of risk

Document type: Article (Portuguese) Show Abstract

This paper aims to evaluate the effects of the aggregate market volatility components – average volatility and average correlation – on the pricing of portfolios sorted by idiosyncratic volatility, using Brazilian data. The study investigates whether portfolios with high and low idiosyncratic volatility - in relation to the Fama and French model (1996) - have different exposures to innovations in average market volatility, and consequently, different expectations for return. The results are in line with those found for US data, although they portray the Brazilian reality. Decomposition of volatility allows the average volatility component, without the disturbance generated by the average correlation component, to better price the effects of a worsening or an improvement in the investment environment. This result is also identical to that found for US data. Average variance should thus command a risk premium. For US data, this premium is negative. According to Chen and Petkova (2012), the main reason for this negative sign is the high level of investment in research and development recorded by companies with high idiosyncratic volatility. As in Brazil this type of investment is significantly lower than in the US, it was expected that a result with the opposite sign would be found, which is in fact what occurred.

Empirical analysis of Brazilian banks’ capital buffers during the period 2001-2011

ID: 40596

Authors: Vinícius Cintra Belém, Ivan Ricardo Gartner.

Source: Revista Contabilidade & Finanças, v. 27, n. 70, p. 113-124, January-April, 2016. 12 page(s).

Keyword: banking institutions , banking risk , dynamic panel data , regulatory capital buffers

Document type: Article (Portuguese) Show Abstract

International literature indicates that the capital buffers held by banks result notably from the trade-off that exists between the cost of holding capital, adjustment costs, and bankruptcy costs, which all have a direct impact on banks’ capital structures. The aim of this paper is to study the degree of sensitivity of Brazilian banks’ capital buffers to the determining factors established in the literature, by using a sample of 121 banks, covering the period from 2001 to 2011. The empirical analysis that was carried out found that there was a significant cost of adjusting capital buffers for the Brazilian banks. At the same time, bankruptcy cost indicated a positive relationship between risk profile and capital buffers, while the cost of holding capital did not exhibit statistical significance in the analysis.

Informações Editoriais 2015

ID: 40597

Authors: Fábio Frezatti.

Source: Revista Contabilidade & Finanças, v. 27, n. 70, p. 125-137, January-April, 2016. 13 page(s).

Document type: Other (Portuguese)

Errata

ID: 40598

Authors: Revista Contabilidade & Finanças.

Source: Revista Contabilidade & Finanças, v. 27, n. 70, p. 138-138, January-April, 2016. 1 page(s).

Document type: Other (Portuguese)