Conditional conservatism and adoption of IFRS: An analysis of brazilian public companies

Abstract

This research had as general objective to investigate if the adoption of the IFRS by the brazilian public companies contributed to increase the quality of the accounting information, from the perspective of the conditional conservatism. Although confused with neutrality, conservatism in the measurement of results is widely recognized as a quality attribute of accounting information, since it implies the tendency of asymmetric recognition between good and bad news by information preparers (BASU, 1997). That is, profits reflect bad news (losses) faster than good news (gains), indicating a lower probability of manipulation of results by managers to maximize their financial performance. To do so, the model of Ball and Shivakumar (2005) was used in a sample of 164 publicly traded non-financial companies listed on the BM &FBovespa during the period from 2002 to 2015, including intervals before and after adoption, to verify if there were Growth of the levels of conditional conservatism that could be attributed to the adoption of IFRS. The results showed that throughout the analyzed period the presence of conditional conservatism was identified, revealing a treatment of anticipation of expenses and postponement of revenues by the preparers of the accounting information. These results, on their own, imply the presence of conditional conservatism in periods before and after the adoption of IFRS. However, when conservatism levels were compared on both occasions, the results showed that conservatism declined after the adoption of IFRS, rejecting the premise that IFRS brought more quality to Brazilian accounting.