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The Impact of IFRS in Brazil: The Legacy of Mandatory Book‐tax Conformity

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  • Sílvio Hiroshi Nakao
  • Sidney J. Gray

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.

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  • Sílvio Hiroshi Nakao & Sidney J. Gray, 2018. "The Impact of IFRS in Brazil: The Legacy of Mandatory Book‐tax Conformity," Australian Accounting Review, CPA Australia, vol. 28(4), pages 482-495, December.
    • Handle: RePEc:bla:ausact:v:28:y:2018:i:4:p:482-495
    DOI: 10.1111/auar.12223
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    Cited by:

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    3. Paula Silva, Ana & Fontes, Alexandra & Martins, Adelaide, 2021. "Perceptions regarding the implementation of International Financial Reporting Standards in Portugal and Brazil," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 44(C).
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    5. R. M. Ammar Zahid & Can Simga‐Mugan, 2024. "The impact of International Financial Reporting Standards adoption on the integration of capital markets," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 29(1), pages 229-250, January.

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