The Impact of IFRS in Brazil: The Legacy of Mandatory Book‐tax Conformity. Issue 4 (15th February 2018)

• Record Type: Journal Article
• Authors: Nakao, Sílvio Hiroshi; Gray, Sidney J.
• Is Part Of: Australian accounting review. Volume 28:Issue 4(2018:Dec.)
• Page Start: 482
• Page End: 495
• Publication Date: 2018-02-15
• Subjects: Accounting -- Australia -- Periodicals; Accounting -- Standards -- Australia -- Periodicals; Accounting -- Periodicals; Managerial accounting -- Periodicals; Corporations -- Finance -- Periodicals; 657.0994
• DOI: 10.1111/auar.12223
• Languages: English
• ISSNs: 1035-6908

Abstract

Abstract: We investigate how Brazil's historical and institutional context is likely important in determining the impact and benefits of International Financial Reporting Standards (IFRS) with special reference to the legacy of taxation regulation, referred to as mandatory book‐tax conformity. We hypothesise that in the early period following IFRS adoption, information quality may not significantly improve in the case of companies with limited levels of stock market monitoring because of the path dependency effects of historically important tax considerations. Overall, our results are consistent with the prediction that companies with limited levels of stock market monitoring continue to exhibit book‐tax conformity with no information quality improvements. At the same time, the results relating to companies with higher levels of stock market monitoring are consistent with the expected information quality improvements associated with IFRS adoption. Abstract : This article investigates the legacy of taxation regulation limiting the information quality improvements expected to arise from IFRS adoption in Brazil. We hypothesise that in the early period following IFRS adoption, information quality may not significantly improve in the case of companies with limited levels of stock market monitoring because of the path dependency effects of taxation regulation.