Did mandatory IFRS adoption affect the cost of capital in Latin American countries?

Moura, André Aroldo Freitas De; Altuwaijri, Aljaohra; Gupta, Jairaj

doi:10.1016/j.intaccaudtax.2020.100301

Cited by 36 publications

(37 citation statements)

References 55 publications

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“…Ainda no contexto de incremento de discricionariedade de gestores em períodos de incerteza política, convém destacar que o ambiente institucional de países da América Latina pode fornecer incentivos na direção daquele incremento. A literatura tem caracterizado esse ambiente exibindo fracos mecanismos de enforcement e de proteção a investidores (Brown et a., 2014;La Porta et al, 1998;Moura et al, 2020), e que tais características se associam a práticas oportunistas executadas por gestores (Leuz, Nanda & Wysocki, 2003). Nesse contexto, se poderia esperar maiores incentivos às práticas discricionárias de gestores em períodos de incerteza política, o que poderia refletir em impacto na capacidade preditiva dos componentes do lucro.…”

Section: Referencial Teórico E Desenvolvimento Da Hipóteseunclassified

“…O exame de tal questão se torna relevante no contexto de mercados emergentes, uma vez que a incerteza política apresenta maior efeito negativo em mercados de capitais emergentes do que em mercados de capitais desenvolvidos, conforme Diamonte, Liew e Steven (1998). Ressalte-se que o ambiente institucional de países da América Latina é geralmente caracterizado por fracos mecanismos de enforcement e de proteção a investidores (Brown, Preiato & Tarca, 2014;La Porta, Lopez-de-Silanes, Shleifer, & Vishny, 1998;Moura, Altuwaijri & Gupta, 2020). Em tal configuração, gestores podem ter mais incentivos para reportar discricionariamente os componentes do lucro em períodos de incerteza política, o que se refletiria em menor capacidade preditiva dos componentes do lucro divulgado.…”

Section: Introductionunclassified

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Capacidade preditiva dos componentes do lucro e incerteza política: evidências de países da América Latina

Passos

Cavalcante

2021

REPeC

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Objetivo: Examinar se a capacidade dos componentes fluxo de caixa e accruals atuais em predizer futuros fluxos de caixa é afetada em períodos de incerteza política.Método: Considerou-se o ano de eleições nacionais como proxy para incerteza política, ao passo que a equação de previsão de fluxos de caixa de um período à frente, estimada por Sys-GMM, foi utilizada para captar a capacidade preditiva dos componentes do lucro segundo períodos de incerteza política. Amostra: Constituída por 386 firmas (4.127 observações-ano) listadas nas bolsas da Argentina, do Brasil, do Chile e do México. Resultados: A capacidade preditiva do componente fluxo de caixa atual sofreu influência negativa de períodos de incerteza política, ao passo que a capacidade do componente accruals não se mostrou afetada por aqueles períodos. Conclui-se que incerteza política afeta negativamente a capacidade preditiva dos componentes do lucro divulgado, contudo tal efeito se mostrou conclusivo apenas para o componente fluxo de caixa atual. Contribuições: Apresentação da realidade do mercado de capitais de países emergentes se constitui na principal contribuição do estudo. Ademais, adiciona-se conhecimento à literatura relacionada à hipótese de incerteza política, lançando luz sobre o impacto desse evento na oferta e disponibilidade de informações úteis em mercado de capitais de países emergentes. Também se mostra relevante para agentes que realizam previsões sobre fluxos de caixa futuros das firmas.

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Section: Referencial Teórico E Desenvolvimento Da Hipóteseunclassified

Section: Introductionunclassified

Capacidade preditiva dos componentes do lucro e incerteza política: evidências de países da América Latina

Passos

Cavalcante

2021

REPeC

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“…Also, the effects of IAS/IFRS adoption on the cost of equity can attract foreign investors. Different studies supported the idea that thanks to accounting harmonisation/convergence with the IAS/IFRS, the cost of equity decrease (Chan et al, 2009;Li, 2010;Castillo Merino et al, 2014;de Moura et al, 2020).…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

“…So, foreign investors are encouraged to diversify their financial portfolio which then generates a virtuous growth circle (Amiram, 2012;Akisik et al, 2020). Moreover, the process of accounting harmonisation positively affects the capital market, increases the liquidity and, consequently, reduces the cost of capital (Daske et al, 2008;Li, 2010;Daske et al, 2013;de Moura et al, 2020).…”

Section: Analysis 1: Ifrs and Fdimentioning

confidence: 99%

“…Some scholars outlined an increase in comparability and transparency of information (Barth et al, 2012;Cascino & Gassen, 2015;Kainth & Wahlstrøm, 2021), while others show how the adoption of the IAS/IFRS improved the liquidity in the financial market (Coyring et al, 2007;Istiningrum, 2020). Still others underline beneficial such as the reduction of the cost of debt (Ozkaya, 2018) and the cost of equity (Li, 2010;de Moura et al, 2020).…”

Section: Introductionmentioning

confidence: 99%

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Accounting Harmonisation through IAS/IFRS and Internationalisation: Evidence from FDIs and Cross-Border M&A

Montani¹,

Gervasio²,

Pulcini³

et al. 2021

AFR

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The process of accounting harmonisation via International Accounting Standards/International Financial Reporting Standards (IAS/IFRS) adoption is very widespread, and it is still involving a huge number of countries all over the world.Previous academic literature investigated the impact of this process from different perspectives, such as the quality of financial reports, the transparency of financial disclosures, the liquidity of the financial markets and the cost of equity.The aim of this article is to contribute to the research stream exploring the effects of IAS/IFRS adoption, investigating if accounting harmonisation through the IAS/IFRS has had an impact on the internationalisation process. To achieve our objective, two multiple linear regression analyses are presented. The first one focuses on the impact of the adoption of IAS/IFRS on foreign direct investments (FDIs) using data collected from a sample of 34 Organisation for Economic Co-Operation and Development (OECD) member countries. The second statistical analysis investigates the influence of IAS/IFRS adoption on cross-border mergers and acquisitions (M&A), considering operations carried out by European-listed companies towards target companies located in the 34 OECD member countries. The FDIs and cross-border M&A are considered proxies of the internationalisation process.Preliminary results show that the adoption of IAS/IFRS has positively affected FDI flows and increased the value of cross-border M&A.This study has tried to provide theoretical contributions to the literature stream about the effects of the harmonisation process with IAS/IFRS adoption, showing the beneficial impact they may have on the internationalisation process. Moreover, our findings can be useful for policymakers and managers, suggesting that becoming IAS/IFRS adopters can facilitate the internationalisation process of the companies.

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Investors’ reaction to banning IFRS use by domestic firms in alternative market

Białek-Jaworska,

Szymanek

2024

J Manag Gov

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This paper analyses the regulatory context, i.e., how IFRS preparers investing in Poland react to banning IFRS use by domestic firms in the alternative trading market (NewConnect) after six years of regulatory arbitrage. In other words, it studies their portfolio investment and foreign direct investment (FDI) outward sensitivity to the end of regulatory arbitrage opportunity given by the alternative market’s regulation in the country where accounting law limits IFRS use to regulated markets and business groups where the parent company uses IFRS. The contribution is built on the natural experiment of prohibition of domestic IFRS preparers issuing shares on the alternative (not-regulated and cheaper) trading market after 2012. The originality is delivered by implementing a de facto measure of IFRS adoption by foreign investors to identify a 69% growth rate of IFRS preparers investing in Polish firms in 2012 (317% growth of Swedish investors and 219% of Portuguese) that dropped to 8% in 2013 and 3% in 2018. Thus, we check whether investing decisions consider opportunities to gain funds or attract other investors and build trust through IPOs on the unregulated market dedicated to start-ups and engaged in R&D activity. We use difference-in-differences, GMM dynamic panel-data analysis with Arellano-Bond and Arellano-Bover/Blundel-Bond estimators for the Knowledge-Capital model on portfolio investment, outward FDI overall, and three FDI components based on debt, equity, and earning reinvestment in 2003–2019. We found that banning IFRS use by domestic firms in the alternative market discourages portfolio investments, debt-based FDI flows and FDI earnings reinvestment. Also, total FDI and equity-based FDI from countries with more IFRS preparers have been reduced since 2013 due to the IFRS ban for domestic firms.

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Did mandatory IFRS adoption affect the cost of capital in Latin American countries?

Cited by 36 publications

References 55 publications

Capacidade preditiva dos componentes do lucro e incerteza política: evidências de países da América Latina

Capacidade preditiva dos componentes do lucro e incerteza política: evidências de países da América Latina

Accounting Harmonisation through IAS/IFRS and Internationalisation: Evidence from FDIs and Cross-Border M&A

Investors’ reaction to banning IFRS use by domestic firms in alternative market

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