Editorial

ID: 6885

Authors: Gilberto de Andrade Martins.

Source: Revista Contabilidade & Finanças, v. 21, n. 54, p. 5-5, September-December, 2010. 1 page(s).

Document type: Editorial (Portuguese)

Voting rights concentration and shareholders agreement: influences on conservatism

ID: 6403

Authors: Alfredo Sarlo Neto, Adriano Rodrigues, José Elias Feres de Almeida.

Source: Revista Contabilidade & Finanças, v. 21, n. 54, p. 6-22, September-December, 2010. 17 page(s).

Keyword: Conservatism , Enforcement effects , Entrenchment effect , Shareholders agreement , Voting rights concentration

Document type: Article (Portuguese) Show Abstract

This study investigates how two features of the ownership structure of Brazilian companies, the voting rights concentration and the shareholders agreement, are associated with the conditional conservatism proposed by Basu (1997). This association was founded on the effects of entrenchment and enforcement. Considering that the degree of conservatism of a firm is tied to the incentives arising from mechanisms that reduce the informational risk to stakeholders, this study was developed on the following research question: What is the influence of both the voting rights concentration and shareholders agreement on the degree of conservatism in the companies listed on Bovespa? The main goal of this work is to deal with factors not yet considered in the (national and international) literature produced in this line of research, and provides evidence about the influence of ownership structure on conservatism in the Brazilian market, which is marked by a, agency conflict between controlling shareholders (controller) and minority shareholders. The sample of the paper comprises 617 observations of non-financial companies traded on Bovespa during the period from 2000 to 2008. Alternatively, another sample was selected, disregarding the observations for 2008, as a means to remove the effects of the financial crisis registered that year. The evidences indicate that the voting rights concentration contributes to decrease the degree of conservatism, while, on the other hand, the stockholders agreement contributes to an increase. Alternatively, the results considered in the global crisis year distort the Basu model (1997). The researchers hope this study contributes for investors, regulators, researchers and analysts to understand the function of accounting information in companies' governance process.

Analysis of the relationship between risk and return in portfolios comprising stock exchange indexes from developed and emerging countries members of BRICs economic bloc

ID: 6404

Authors: José Odálio dos Santos, Paula Augusta Coelho.

Source: Revista Contabilidade & Finanças, v. 21, n. 54, p. 23-37, September-December, 2010. 15 page(s).

Keyword: Financial globalization , Portfolios , Return , Risk

Document type: Article (Portuguese) Show Abstract

The aim of this study was to examine whether the formation of portfolios composed of international assets can provide risk and return more advantageous for the investor. In parallel, we analyzed the stage of integration between the economies of selected countries through the model developed by Securato (1997), called Restricted Globalization Level (NGR). The survey was based on two periods: 1996 to 2000, when the opening of important emergent markets is intensified, and from 2003 to 2007 to compare the results. To analyze the contribution of international diversification, we calculated the risk and return of four portfolios: 1. stock market indexes of developed countries (UK, USA and Japan) and the BRIC countries, 2. stock market indexes from the U.S. and the BRIC countries, 3. stock market indexes of BRIC countries, and 4. stock market indexes of developed countries. The empirical results suggest that investors would get the best results if they chose portfolios composed of stock market indexes of the United States and the BRIC countries. The addition of these assets in the portfolio would generate lower rates of covariance, i.e., lower risk exposure per unit of return. Moreover, although increasing the level of globalization of markets in the latest survey period (2003-2007) increased, there was a need for greater integration between the economies of selected countries (NGR <0.50).

Searching for evidence of the asset growth effect in Ibovespa: an exploratory study

ID: 6405

Authors: Fernanda Vieira Fernandes Ribeiro.

Source: Revista Contabilidade & Finanças, v. 21, n. 54, p. 38-50, September-December, 2010. 13 page(s).

Keyword: Asset growth , Asset return , Negative relationship , Panel data

Document type: Article (Portuguese) Show Abstract

The main objective of this study is to analyze, for Brazil, the existence of an intriguing question in the international literature: firms with lower growth in total assets observed superior returns compared to those with higher growth. Therefore, the Bovespa index was considered as a proxy for the Brazilian market. Among the companies in the index, non-financial firms were selected, for which data were available for the period from 2000 to 2009. In order to verify whether there is a negative relationship between total assets growth and stock returns, we first separated them into four portfolios, based on the weighted average growth of total assets, and the logarithmic returns were calculated. In addition to descriptive statistics, a correlation matrix, ADF unit root test, linear regressions and annual panel data were developed. Based on the results, we concluded that it is not possible to say that this relationship exists in Brazil as the tests were not statistically significant. One possible reason for these results is that Brazil has lines of funding from official bodies, with low interest rates, which influences the market to react even positively in view of a growth in total assets.

The external impacts of Central Bank Independence

ID: 6406

Authors: Carroll Howard Griffin.

Source: Revista Contabilidade & Finanças, v. 21, n. 54, p. 51-63, September-December, 2010. 13 page(s).

Keyword: Asia , Central Bank Independence , Financial crisis , Latin America

Document type: Article (English) Show Abstract

The term "central bank independence" (or abbreviated, CBI) can be broadly defined as the degree of freedom of the central bank to pursue monetary policy without interference from political considerations. The idea of central bank independence has been widely accepted over the last several decades by many countries around the world, both developed and developing. Since being first written about academically in the late 1980s, many countries have come to adopt this policy and many governments have come to recognize this as standard procedure. As such, many countries around the world granted autonomy to their central banks during the 1980s and 1990s. The majority of past studies have examined primarily the impact of central bank independence on inflation. however, the additional theoretical benefits are much more far reaching, the result of a more stable and prosperous macroeconomic environment. Additionally, there is only now sufficient data to empirically determine whether many of these claims are true. This study examines central bank independence in developing countries of Latin America and Asia as well as selected developed countries to determine what actual impact an autonomous central bank has had. It also examines such phenomena as financial crises (including the current global crisis of 2008-2009), inflation targeting, legal systems, country development and fiscal policy to determine the effects of these items on not only inflation, but the broad spectrum of macroeconomic outcomes. Although there is some empirical evidence to support the benefits of central bank independence, it is limited in scope to certain areas.

Conditional Conservatism: a study based on economic variables

ID: 6407

Authors: Rafael de Lacerda Moreira, Romualdo Douglas Colauto, Hudson Fernandes Amaral.

Source: Revista Contabilidade & Finanças, v. 21, n. 54, p. 64-84, September-December, 2010. 21 page(s).

Keyword: Accounting information quality , Accruals , Conservatism

Document type: Article (Portuguese) Show Abstract

Accounting from an information perspective looks at the usefulness of that information. Conditional Conservatism is linked to the trend for accounting to require a higher degree of good news verification before disclosing it in the income when compared with the degree of bad news verification. In view of concerns with accounting information quality, this article aims to review the reflection of Conditional Conservatism in accounting income, based on economic variables. The study uses the Reverse Model of Associated Profit to Returns (BASU, 1997) and the model proposed by Kahn and Watts (2009), which examine the relation between accounting profit variables and economic return, using positive and negative returns as a proxy for good and bad news, and other variables widely accepted for the evaluation of conservatism. Therefore, statistical models were estimated for a sample of 96 companies from 2005 to 2007, based on annual information available in Economática® and data reported in explanatory notes. To select an economic event that may influence the asymmetric recognition of economic income, the researchers decided to compare results between companies listed on Bovespa's governance levels and other companies. The obtained results confirm the hypothesis on the use of conditional conservatism among sample companies for income measurement purposes. The positive differences in the degree of conservatism for companies adhering to governance levels are not conclusive, as the models showed scattered results. The economic variables offer advantages when the bad news may not be as clearly visible in the financial statements, which may reduce expected future results.