The Determinants of Firm-Specific Corporate Governance Arrangements, IFRS Adoption, and the Informativeness of Accounting Reports: Evidence from Brazil

2016 ◽  
Vol 15 (2) ◽  
pp. 101-124 ◽  
Author(s):  
Alexsandro Broedel Lopes ◽  
Martin Walker ◽  
Ricardo Luiz Menezes da Silva
Keyword(s):  
Corporate Governance ◽  
Essential Elements ◽  
Accounting Quality ◽  
Firm Level ◽  
Ifrs Adoption ◽  
Cross Listing ◽  
Governance Index ◽  
Corporate Governance Quality ◽  
Accounting Reports ◽  
Governance Arrangements

ABSTRACT In this study we investigate the complementary effect of firm-level incentives and IFRS adoption on the informativeness of accounting reports in Brazil. Using a specially constructed corporate governance index—Brazilian Corporate Governance Index (BCGI)—we show that the quality of corporate governance is linked to the growth opportunities firms face. Consistent with the argument that accounting numbers are essential elements of corporate governance arrangements, we show that improvements in corporate governance are associated with economically material and statistically significant improvements in indicators of accounting quality. We also show that corporate governance quality and accounting quality are also positively affected by cross-listing, although cross-listing is not the only driver of either of these quality choices. Our results also show that IFRS adoption leads to an increase in the informativeness of accounting reports in Brazil, especially for firms that do not possess the ex ante incentives to produce high-quality financial statements.

Discussion of The Determinants of Firm-Specific Corporate Governance Arrangements, IFRS Adoption, and the Informativeness of Accounting Reports: Evidence from Brazil

2016 ◽  
Vol 15 (2) ◽  
pp. 125-128 ◽  
Author(s):  
Fernando Dal-Ri Murcia
Keyword(s):  
Corporate Governance ◽  
Emerging Economies ◽  
Financial Reports ◽  
Ifrs Adoption ◽  
The Third ◽  
Bonding Hypothesis ◽  
Research Questions ◽  
Accounting Reports ◽  
Governance Arrangements

ABSTRACT The objective of this paper is to present a discussion of the article “The Determinants of Firm-Specific Corporate Governance Arrangements, IFRS Adoption, and the Informativeness of Accounting Reports: Evidence from Brazil,” which was presented in the Third International Conference of the Journal of International Accounting Research (JIAR). This discussion considers the paper's research questions, hypotheses, and design, as well as the setting in which the study was conducted. In my opinion, the paper's main contribution is to present evidence of a “National Bonding Hypothesis,” where companies with significant growth opportunities located in emerging economies voluntarily subject themselves to higher standards of corporate governance, which in turn impact the quality of their financial reports.

scholarly journals Corporate Governance and Cost of Capital: Evidence from Emerging Market

Risks ◽  
2020 ◽  
Vol 8 (4) ◽  
pp. 104
Author(s):  
Muhammad Yar Khan ◽  
Anam Javeed ◽  
Ly Kim Cuong ◽  
Ha Pham
Keyword(s):  
Corporate Governance ◽  
Lower Cost ◽  
Cost Of Capital ◽  
Emerging Market ◽  
Firm Level ◽  
Listed Firms ◽  
Corporate Failure ◽  
Governance Index ◽  
Governance Practices ◽  
Code Of Corporate Governance

This study used a researcher self-constructed corporate governance index as a proxy to measure the firm-level corporate governance compliance and disclosure with the 2002 Pakistani Code of Corporate Governance, to examine the relationship between corporate governance and cost of capital. We found a negative and significant association between the Pakistani Corporate Governance Index (PCGI) and block ownership with the firm-level cost of capital. On average, better-governed Pakistani listed firms tend to be associated with a lower cost of capital than their poorly governed counterparts are. As an emerging market, good corporate governance practices are mainly related to minimise corporate failure and assist firms in attracting capital at a lower cost.

scholarly journals The Effects of Financial Reporting on Bank Loan Contracting in Global Markets: Evidence from Mandatory IFRS Adoption

2015 ◽  
Vol 14 (2) ◽  
pp. 45-81 ◽  
Author(s):  
Tai-Yuan Chen ◽  
Chen-Lung Chin ◽  
Shiheng Wang ◽  
Wei-Ren Yao
Keyword(s):  
Interest Rates ◽  
Financial Reporting ◽  
Bank Loans ◽  
Bank Loan ◽  
Accounting Quality ◽  
Firm Level ◽  
Financial Reporting Standards ◽  
Ifrs Adoption ◽  
Loan Contracting ◽  
The 2008 Financial Crisis

ABSTRACT This study examines the effects of the mandatory adoption of International Financial Reporting Standards (IFRS) on the contract terms of bank loans in a global setting. Using a difference-in-differences design based on 26,474 bank loans in 31 countries during the 2000–2011 period, we find that borrowers who mandatorily adopt IFRS experience an increase in interest rates, a reduction in the use of accounting-based financial covenants, an increase in the likelihood that a loan is collateralized, a reduction in loan maturity, and an increase in the fraction of a loan retained by lead arrangers. These findings are robust to the removal of the 2008 financial crisis from our analysis, as well as to the matching of IFRS and non-IFRS borrowers on various country- and firm-level characteristics. Furthermore, we find that these changes are more pronounced for borrowers with greater financial reporting changes, as well as those with poorer accounting quality after IFRS adoption. JEL Classifications: G15; G21; F34; M41.

scholarly journals Corporate Governance in Russian electric power industry in terms of consumer requirements to its funding sources

2018 ◽  
Vol 58 ◽  
pp. 02004
Author(s):  
G.I. Sheveleva
Keyword(s):  
Power Generation ◽  
Corporate Governance ◽  
Information Disclosure ◽  
Good Governance ◽  
Electric Power Industry ◽  
Transparency International ◽  
Governance Index ◽  
Governance Quality ◽  
Corporate Governance Quality ◽  
International Good

The paper highlights a strong interest of energy consumers in attracting investment in the development of Russian power generation companies. The importance of corporate governance for enhancing the investment attractiveness of these companies is emphasized. An in-depth evaluation of their current corporate practices was carried out within the framework of the existing ownership structure. The study identified the indicators of corporate governance quality for the benefit of modern investors that are the least observed by the overwhelming majority of power companies. The indicators were obtained on the basis of whether or not the companies satisfy the criteria of the new Russian Corporate Governance Code, and the criteria of the methodologies of Standard & Poor’s, Spencer Stuart and Transparency International. The study shows a slight increase in the transparency of the companies in the post-reform period and compares it with the information disclosure by the major corporations of Great Britain, the USA and Europe. The study shows high correlation of the approach and composition of the identified indicators of the corporate governance quality for Russian power generation companies with the 2017 Russian Corporate Governance Index. This Index is based on the international Good Governance Index methodology adapted to the Russian conditions.

scholarly journals Libya’s IAS/IFRS Adoption and Accounting Quality: What Lessons from the European Union Experience

2014 ◽  
Vol 4 (1) ◽  
pp. 118 ◽  
Author(s):  
Najeb Masoud
Keyword(s):  
Financial Reporting ◽  
Stock Price ◽  
Accounting Information ◽  
Financial Accounting ◽  
Future Research ◽  
The European Union ◽  
Accounting Quality ◽  
Ifrs Adoption ◽  
Accounting Reports

This study provides a review of the literature on adoption of IAS/IFRS in Libya, the time the IFRS standards decision is made in EU countries and the time IAS/IFRS adoption becomes undertaking in Libyan economy. The adoption of IAS/IFRS in Europe on the quality of financial reporting is an example of accounting standardisation among countries with different institutional frameworks and implementation rules. Impacts of this adoption in Libya will gain many benefit include the improve quality of financial reporting, less earnings management, more comparability, and provide more reliable, accurate, transparency, and high relevance for stock price determination of financial accounting information. These findings could be fruitful and helpful for outside users of accounting reports and also for regulators and legislators in their attempts to constrain the incidence of earnings accounting practises and to enhance the quality of accounting information. To explore the relevance (applicability) of international accounting standards to developing countries such as Libya is a topic of significant interest amongst disclosure (non-accounting information) users. This is a key subject for standard setting purposes as IAS/IFRS have been adopted in many different nations all over the world, and many others are likely to adopt them in the near future (including, Libya). Finally the main limitations of this study are outlined and opportunities for future research are discussed, particularly in relation to this study’s findings about the requirement to reconsider the usefulness of the relationship between accounting practices and framework adoption of IAS/IFRS in Libya.

scholarly journals Board governance index, financial performance and accountability-emphasis in government business corporations

2009 ◽  
Vol 7 (1) ◽  
pp. 96-107
Author(s):  
Cheaseth Seng
Keyword(s):  
Corporate Governance ◽  
Financial Performance ◽  
Resource Dependence ◽  
Board Governance ◽  
Governance Arrangement ◽  
Exploratory Investigation ◽  
Governance Index ◽  
Current Board ◽  
The Relationship ◽  
Governance Arrangements

This study contributes to the growing literature on corporate governance index (CGI) by investigating the impacts a board governance index (BGI) developed in context of government business corporations (GBCs) on their financial performance. In addition, the study tests relevant corporate governance theories, namely agency, networking and resource dependence theories, in the context of GBCs. Concurrently, the study also conducts an exploratory investigation of the relationship between board governance arrangements and emphasis provided by GBCs’ management to processes and systems for discharging accountability requirements (accountability-emphasis). The study found that the current board governance arrangement of GBCs is positively related to financial performance. This finding is consistent with majority of prior studies in context of private sector entities. However, there isn’t any significant relationship found between board governance index and accountability-emphasis.

scholarly journals “Governance” premium? Evidences from the nine emerging markets of Asia

2008 ◽  
Vol 6 (Special Issue 1) ◽  
pp. 6-14
Author(s):  
Chien-An Wang ◽  
Lin Lin ◽  
Ming-Yuan Li
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Emerging Markets ◽  
Stock Return ◽  
Cost Of Capital ◽  
Stock Exchange ◽  
Firm Level ◽  
Fundamental Value ◽  
Accounting Reports ◽  
The Relationship

This paper hypothesizes the relationships of corporate governance, firm performance, and cost of capital, using the firm-level sample from the nine emerging markets of Asia in 2001 and 2002. Our empirical results confirmed the relationship between the corporate governance and firm performance, measured by the stock return and the rate return on asset, is not significant. Evidence implied that the stock return of emerging markets may be largely influenced by unknown but irrational factors, and their accounting reports of the companies listed in such stock exchange are not trustworthy due to window-dressing. The fundamental value and the value of corporate governance are thus not incorporated into the re-evaluation of the prices of the related stocks. However, empirical evidence also indicated that the firms with better corporate governance can reduce their costs of capital in a defensive manner, realized when a raise of fund is required.

scholarly journals The effect of corporate governance and investor protection environments on the value relevance of new accounting standards: the case of IFRS 9 and IAS 39

2020 ◽  
Author(s):  
Alessandro Mechelli ◽  
Riccardo Cimini
Keyword(s):  
Corporate Governance ◽  
Value Relevance ◽  
Investor Protection ◽  
Accounting Standards ◽  
Accounting Quality ◽  
High Quality ◽  
Firm Level ◽  
Ias 39 ◽  
Ifrs 9

AbstractThe first-time adoption of IAS/IFRS accompanied by the issuance of new international accounting standards has provided mixed results regarding their ability to improve accounting quality. A possible reason is that not only the quality of the standard-setting process, but also other factors might affect accounting quality and one of its dimensions, namely, value relevance. By analysing data from a sample of 316 financial entities listed in 43 countries from all over the world and adopting IFRS 9 in place of IAS 39 as of 1st January 2018, this paper tests whether the quality of firm-level corporate governance and country-level investor protection environments affects the value relevance of equity values calculated according to the requirements of IFRS 9 and IAS 39. The results suggest that, despite both accounting standards providing investors with value relevant information, in the presence of high-quality corporate governance or a high-quality investor protection environment, IFRS 9 is more value relevant than IAS 39, whereas the opposite is true in the presence of low-quality corporate governance or a low-quality investor protection environment. The research results provide the first empirical evidence of the value relevance of the new accounting standard on financial instruments and contribute to the debate on the existence of other factors that, together with the quality of the IASB standards, affect the quality of financial reporting.

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