Expected impacts of the international harmonization on brazilian enterprises' profit
DOI:
https://doi.org/10.11606/rco.v3i6.34741Keywords:
International Accounting, accounting harmonization, BRGAAP, USGAAP, index of conservatism, comparability index, New Corporation LawAbstract
This study a estimates expected impacts on Brazilian companies' reported profits, arising from the international accounting harmonization, rendered mandatory by the Brazilian New Corporation Law (Law 11.638/07). BRGAAP/USGAAP profit adjustments reported by Brazilian issuers of ADRs on NYSE are taken as proxy. Gray's (1980, 1988) "Index of Conservatism" is applied, which enables to predict lower profits (conservatism) measured by Brazilian in relation to American accounting. Some inconsistencies observed in prior work, are examined. The "Partial Comparability Index" (Weetman et al., 1998) is applied to analyzing impacts of norms' differences on profit adjustments published in Profit Reconciliations of SEC Form 20-F from 2001 to 2006. Findings confirm the Brazilian accounting conservatism with an index of 0,91 for the subperiod 2003-2006, thus predicting that the international harmonization could lead to an average increase of 9,5% in reported profits by Brazilian companies. The most relevant adjustments - specifically Monetary Restatement 1996/97, Premium in Business Combinations, Financial Instruments and Assets Revaluation - were identified. The study intends to contribute to better understanding future impacts of the initiated harmonization and its regulation in Brazil.Downloads
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