Impact of Adopting IFRS Standard on the Equity Cost of Brazilian Open Capital Companies

Authors

  • Rafael Confetti Gatsios Faculdade de Economia Administração e Contabilidade de Ribeirão Preto - FEARP- USP
  • José Marcos da Silva Faculdade de Economia Administração e Contabilidade de Ribeirão Preto - FEARP- USP
  • Marcelo Augusto Ambrozini Faculdade de Economia Administração e Contabilidade de Ribeirão Preto - FEARP- USP
  • Alexandre Assaf Neto FIPECAFI - Fundação Instituto de Pesquisas Contábeis, Atuariais e Financeiras.
  • Fabiano Guasti Lima Faculdade de Economia Administração e Contabilidade de Ribeirão Preto - FEARP- USP

Keywords:

Cost of equity. CAPM. IFRS. Quality of accounting information. Brazil.

Abstract

Purpose: This study aims to assess the impact of adopting IFRS standard on the equity cost of Brazilian open capital companies in the period of 2004-2013

Originality/Gap/Relevance/Implications: The adoption of International Financial Reporting Standards aims to increase the quality of accounting information. Studies for Europe suggest that after the adoption of the IFRS standard there was a reduction in the equity cost of companies due to the reduction of information asymmetry and risk.

Key methodological aspects:  The  Equity cost was calculated using the CAPM model (Capital Asset Pricing Model) adapted to the Brazilian case. The empirical strategy was the differences in differences, comparing the results of companies that voluntarily adopted the IFRS with companies that adopted IFRS after the mandatory adoption period.

Summary of key results: The results indicate that the adoption of the IFRS standard does not contribute to reduce the equity cost in Brazil

Key considerations/conclusions: Suggesting that the process of adopting international accounting standard may take much time to impact the equity cost of Brazilian open capital companies, since the impact of IFRS is not related only with the adoption, but also with its use by companies and users.

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Published

2016-09-15

Issue

Vol. 17 No. 4 (2016)

Section

Strategic Finances

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