The effects of IFRS 9 on the earnings persistence
Abstract
Objective: This study aimed to investigate the effects of adopting IFRS 9 on the quality of earnings, using the attribute of earnings persistence.
Method: The earnings persistence attribute was used as a proxy for earnings quality, based on the Dechow and Schrand (2004) model. With quarterly data from 331 companies from 2015 to 2020, three multiple regressions were analyzed to capture the effect of the new standard on the persistence of earnings.
Results: The model proved to be consistent and robust, so that it was found that the earnings reported under the aegis of IFRS 9 were more persistent than the earnings reported before the adoption of IFRS 9. In this sense, it can be concluded that there was an increase in the attribute of persistence and, therefore, an improvement in the quality of earnings reported by companies in the period studied.
Contributions: The 2008 financial crisis had important consequences for international accounting standards, IFRS 9 being one of them. On the one hand, the change brought an increase in professional judgment on the part of credit losses and, on the other hand, the new classification of financial instruments put an end to the possibility of an advantageous choice by management. To study this dilemma, this work innovates in identifying the effects of changes in relation to the quality of earnings, especially in the attribute of persistence. Thus, it complements previous studies that analyzed the effects of recent changes promoted by the IASB and fosters the debate on the implications of IFRS 9. In this way, the work contributes to the investor, who demands quality information, to the standard-setter, who must monitor the effects of its norms for the quality of the information, and for the researcher, who can compare and criticize the results obtained with other studies carried out by the academy.
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