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The Impact of IFRS in Brazil: The Legacy of Mandatory Book‐tax Conformity
Author(s) -
Nakao Sílvio Hiroshi,
Gray Sidney J.
Publication year - 2018
Publication title -
australian accounting review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.551
H-Index - 36
eISSN - 1835-2561
pISSN - 1035-6908
DOI - 10.1111/auar.12223
Subject(s) - conformity , accounting , business , international financial reporting standards , stock market , quality (philosophy) , context (archaeology) , stock (firearms) , dependency (uml) , conformity assessment , economics , political science , law , operations management , mechanical engineering , paleontology , philosophy , systems engineering , epistemology , biology , engineering
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.