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Full adoption of IFRSs in Brazil: Earnings quality and the cost of equity capital |
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| Institution: | 1. Department of Accounting, National Chengchi University, Taipei 11605, Taiwan;2. Department of Accounting, National Taiwan University, No. 1, Sec. 4, Roosevelt Road, Taipei 106, Taiwan;3. Manchester Accounting and Finance Group, Manchester Business School, University of Manchester, Crawford House, Oxford Road, Manchester M13 9PL, UK |
| 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 |
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