Full adoption of IFRSs in Brazil: Earnings quality and the cost of equity capital

Ricardo Luiz Menezes da Silva and Paula Carolina Ciampaglia Nardi

Research in International Business and Finance, 2017, vol. 42, issue C, 1057-1073

Abstract: The purpose of this paper is to investigate the impact of IFRS adoption on the earnings quality and the cost of equity capital of Brazilian companies. It is assumed that an increase in information contributes to a reduction in asymmetric information. A conjecture is that more efficient allocation of resources will result in a reduction in the cost of capital. The results show that the hypothesis of an increase in earnings quality after IFRS adoption holds true. The models used to analyze the equity cost of capital suggest a reduction in the cost of capital of around 7 basis points.

Keywords: Brazil; International Financial Reporting Standards; Cost of equity capital; Earnings quality; Capital market (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:42:y:2017:i:c:p:1057-1073

DOI: 10.1016/j.ribaf.2017.07.041

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