Mandatory IFRS adoption, corporate governance, and firm value

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Published: Apr 17, 2020
DOI: https://doi.org/10.1590/S0034-759020200405
Keywords:
IFRS corporate governance firm value accounting quality

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Joelson Sampaio
Fundação Getulio Vargas, Escola de Economia de São Paulo, São Paulo, SP, Brazil
http://orcid.org/0000-0001-6560-2481
Humberto Gallucci
Universidade Federal de São Paulo, Departamento de Ciências Atuariais, São Paulo, SP, Brazil
http://orcid.org/0000-0001-7905-1879
Vinicius Augusto Brunassi Silva
Fundação Escola de Comercio Alvares Penteado, Instituto de Finanças, São Paulo, SP, Brazil
http://orcid.org/0000-0002-1299-321X
Rafael Felipe Schiozer
Fundação Getulio Vargas, Escola de Economia de São Paulo, São Paulo, SP, Brazil
http://orcid.org/0000-0003-3890-6345

Abstract

We study whether financial and accounting disclosure affect firm value by focusing on the full adoption of International Financial Reporting Standards (IFRS) in Brazil in 2010. We compare firms with ex-ante lower accounting quality (firms in the Regular and Level 1 tiers of corporate governance) with otherwise similar firms that had already complied with higher-quality accounting standards (firms in the Level 2 and Novo Mercado tiers). IFRS adoption has a positive impact of approximately 30 percentage points on Tobin´s Q and 26 percentage points on market-to-book ratios for firms in the lower governance tiers, and substantially reduces the valuation gap between firms in the higher and lower tiers of corporate governance. This reduction in the valuation gap after IFRS adoption is explained by the relative increase in foreign ownership and stock liquidity of firms in the lower governance tiers.

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How to Cite
SAMPAIO, J.; GALLUCCI, H.; BRUNASSI SILVA, V. A.; SCHIOZER, R. F. Mandatory IFRS adoption, corporate governance, and firm value. RAE - Revista de Administracao de Empresas , [S. l.], v. 60, n. 4, p. 284–298, 2020. DOI: 10.1590/S0034-759020200405. Disponível em: https://periodicos.fgv.br/rae/article/view/81318. Acesso em: 3 jul. 2024.
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Vol. 60 No. 4 (2020): July-August
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