Asset informativeness and the systematic risk of regulated infrastructure firms after the adoption of IFRS in Brazil
DOI:
https://doi.org/10.16930/2237-766220253594Keywords:
IFRS, IFRIC 12, Asset Informativeness, Systematic Risk, Regulated FirmsAbstract
This study analyzes the relationship between the informativeness of accounting assets and the systematic risk of regulated infrastructure firms in Brazil following the adoption of IFRS, with a focus on companies applying IFRIC 12. Using data from 89 Brazilian firms listed on B3, including 21 regulated firms that adopted IFRIC 12, panel data linear regressions were performed using the difference-in-differences method, covering the period from 2004 to 2022. Asset informativeness was measured by the coefficient of determination (R²) in regressions of operating income on lagged assets. This study stands out by exploring a relatively under-researched topic: asset informativeness. The findings show that the informativeness of accounting assets in firms applying IFRIC 12 under IFRS is associated with a reduction in systematic risk. However, for firms in general, asset informativeness is positively associated with systematic risk over the entire study period, but negatively associated after IFRS adoption. This study contributes to the literature by introducing a new measure to assess the quality of accounting information and by focusing on firms that applied IFRIC 12. It offers practical insights to financial statement preparers by showing how IFRS and IFRIC 12 enhanced the asset’s ability to explain firm performance, thereby reducing systematic risk. It also helps to understand how accounting choices and methods can impact assets and, consequently, firm risk. Additionally, the study supports policymakers, regulators, and investors in identifying the economic consequences of mandatory IFRS adoption on systematic risk, and how this may influence firms’ cost of capital and economic value.
References
Admati, A. R., & Pfleiderer, P. (1988). A theory of intraday patterns: Volume and price variability. The Review of Financial Studies, 1(1), 3–40. http://www.jstor.org/stable/2962125
Akamah, H., Mason, S., & Shafron, E. (2022). Disincentives to exchange customized local GAAP for IFRS. Journal of Accounting and Public Policy, 41(6), 107002. https://doi.org/10.1016/j.jaccpubpol.2022.107002
Akbar, A., Akbar, M., Nazir, M., Poulova, P., & Ray, S. (2021). Does working capital management influence operating and market risk of firms? Risks, 9(11), 201. https://doi.org/10.3390/risks9110201
Ashbaugh, H., & Pincus, M. (2001). Domestic accounting standards, international accounting standards, and the predictability of earnings. Journal of Accounting Research, 39(3), 417–434. https://doi.org/10.1111/1475-679X.00020
Armstrong, C. S., Barth, M. E., Jagolinzer, A. D., & Riedl, E. J. (2010). Market reaction to the adoption of IFRS in Europe. The Accounting Review, 85(1), 31–61. https://doi.org/10.2308/accr.2010.85.1.31
Bai, J., Philippon, T., & Savov, A. (2016). Have financial markets become more informative? Journal of Financial Economics, 122(3), 625–654. https://doi.org/10.1016/j.jfineco.2016.08.005
Bansal, M. (2023). Economic consequences of IFRS convergence: Evidence from phased manner implementation in India. Journal of Asia Business Studies, 17(1), 129–148. https://doi.org/10.1108/JABS-10-2021-0414
Barth, M. E. (2008). Global financial reporting: Implications for US academics. The Accounting Review, 83(5), 1159–1179. https://doi.org/10.2308/accr.2008.83.5.1159
Barth, M. E., Konchitchki, Y., & Landsman, W. R. (2013). Cost of capital and earnings transparency. Journal of Accounting and Economics, 55(2–3), 206–224. https://doi.org/10.1016/j.jacceco.2013.01.004
Basu, S. (1997). The conservatism principle and the asymmetric timeliness of earnings. Journal of Accounting and Economics, 24(1), 3–37. https://doi.org/10.1016/S0165-4101(97)00014-1
Beaver, W., Kettler, P., & Scholes, M. (1970). The association between market-determined and accounting-determined risk measures. The Accounting Review, 45(4), 654–682. https://doi.org/10.2307/2979035
Berger, P. G., & Tomy, R. E. (2024). Supply Chain Shocks and Firm Productivity: The Role of Reporting Quality. Chicago Booth Research Paper, (24–01). http://dx.doi.org/10.2139/ssrn.4683003
Black, F. (1980). The magic in earnings: Economic earnings versus accounting earnings. Financial Analysts Journal, 36(6), 19–24. https://doi.org/10.2469/faj.v36.n6.19
Bose, S., & Yu, C. (2023). Does earnings quality influence corporate social responsibility performance? Empirical evidence of the causal link. Abacus. https://doi.org/10.1111/abac.12286
Cardoso, V. R. S., & Britto, P. A. P. (2024). Relação entre a informatividade do ativo contábil e o risco sistemático das empresas brasileiras. Revista de Educação e Pesquisa em Contabilidade (REPeC), 18(1). https://doi.org/10.17524/repec.v18i1.3322
Cardoso, V. R. S., Gonçalves, R. S., Souza, P. V. S., & Britto, P. A. P. (2025). Spillover effect of peer earnings quality on systematic risk of Brazilian companies. Revista Contabilidade & Finanças, 36(97), e2039. https://doi.org/10.1590/1808-057x20242039.pt
Chen, Q., Schipper, K., & Zhang, N. (2022). Measuring accounting asset informativeness. The Accounting Review, 97(4), 209–236. https://doi.org/10.2308/TAR-2019-0585
Collins, D. W., Maydew, E. L., & Weiss, I. S. (1997). Changes in the value-relevance of earnings and book values over the past forty years. Journal of Accounting and Economics, 24(1), 39–67. https://doi.org/10.1016/S0165-4101(97)00015-3
Constantinides, G. M. (1986). Capital market equilibrium with transaction costs. Journal of Political Economy, 94(4), 842–862. https://www.jstor.org/stable/1833205
Covrig, V. M., DeFond, M. L., & Hung, M. (2007). Home bias, foreign mutual fund holdings, and the voluntary adoption of international accounting standards. Journal of Accounting Research, 45(1), 41–70. https://doi.org/10.1111/j.1475-679X.2007.00226.x
Cruz, C. F., Silva, A. F., & Rodrigues, A. (2009). Uma discussão sobre os efeitos contábeis da adoção da interpretação IFRIC 12 Contratos de concessão. Revista Contabilidade Vista & Revista, 20(4), 57–85. https://revistas.face.ufmg.br/index.php/contabilidadevistaerevista/article/view/716
Daneberg, T. & Decourt, R. (2021). Impactos da adoção das International Financial Reporting Standards (IFRS) nos indicadores econômico-financeiros de instituições financeiras brasileiras. Revista Contemporânea de Contabilidade, 18(46), 80–96. https://doi.org/10.5007/2175-8069.2021.e65790
Dechow, P. M., Sloan, R. G., & Sweeney, A. P. (1995). Detecting earnings management. The Accounting Review, 70(2), 193–225. https://www.jstor.org/stable/i302551
Dechow, P. M., & Dichev, I. D. (2002). The quality of accruals and earnings: The role of accrual estimation errors. The Accounting Review, 77(s-1), 35–59. https://doi.org/10.2308/accr.2002.77.s-1.35
Dechow, P., Ge, W., & Schrand, C. (2010). Understanding earnings quality: A review of the proxies, their determinants and their consequences. Journal of Accounting and Economics, 50(2-3), 344–401. https://doi.org/10.1016/j.jacceco.2010.09.001
Fama, E. F., & French, K. R. (1993). Common risk factors in the returns on stocks and bonds. Journal of Financial Economics. 33(1), 3-56. https://doi.org/10.1016/0304-405X(93)90023-5
Flores, E., & Lopes, A. B. (2020). Decréscimo na Relevância da Informação Contábil das Distribuidoras de Energia Elétrica no Brasil no Período Pós-IFRS. Revista Brasileira de Gestão de Negócios, 21, 928–952. https://doi.org/10.7819/rbgn.v21i5.4023
Francis, J. R., Khurana, I. K., & Pereira, R. (2005). Disclosure incentives and effects on cost of capital around the world. The accounting review, 80(4), 1125–1162. https://doi.org/10.2308/accr.2005.80.4.1125
Habib, A., Bhuiyan, M. & Hasan, M. M. (2019). IFRS adoption, financial reporting quality and cost of capital: A life cycle perspective. Pacific Accounting Review, 31(3), 497–522. https://doi.org/10.1108/PAR-08-2016-0073
Hamada, R. S. (1972). The effect of the firm's capital structure on the systematic risk of common stocks. The journal of finance, 27(2), 435–452. https://doi.org/10.2307/2978486
Hayashi, F. (1982). Tobin's marginal q and average q: A neoclassical interpretation. Econometrica, 50(1), 213–224. https://doi.org/10.2307/1912538
Healy, P. M. (1985). The effect of bonus schemes on accounting decisions. Journal of Accounting and Economics, 7(1–3), 85–107. https://doi.org/10.1016/0165-4101(85)90029-1
Heidary, Z., Foroughi, D., & Rohravi, A. (2024). Accounting Asset Informativeness Based on Intrinsic and Optional Factors and Investors' Beliefs: Investigating the Effects of Accounting Earnings Quality. Empirical Studies in Financial Accounting, 21(82), 1–42. https://doi.org/10.22054/qjma.2024.79868.2571
Hong, G., & Sarkar, S. (2007). Equity systematic risk (beta) and its determinants. Contemporary Accounting Research, 24(2), 423–466. https://doi.org/10.1506/8187-56KM-6511-Q532
International Accounting Standard Board (IASB). (2006). IFRIC 12: Service concession arrangements. IFRS Foundation.
International Accounting Standards Board. (2014). Reporting the financial effects of rate regulation. IFRS Foundation.
International Accounting Standard Board (IASB). (2021). Exposure Draft - Regulatory Assets and Regulatory Liabilities. IFRS Foundation.
International Accounting Standard Board (IASB). (2022). Who uses IFRS accounting standards? IFRS Foundation.
Jian, J., Yang, F., Liu, M., & Liu, Y. (2023). Cost of equity capital and annual report tone manipulation. Emerging Markets Finance and Trade, 1–22. https://doi.org/10.1080/1540496X.2023.2226320
Jones, J. J. (1991). Earnings management during import relief investigations. Journal of Accounting Research, 29(2), 193–228. https://doi.org/10.2307/2491047
Kanodia, C., Singh, R., & Spero, A. E. (2005). Imprecision in accounting measurement: Can it be value enhancing? Journal of Accounting Research, 43(3), 487–519. https://doi.org/10.1111/j.1475-679X.2005.00178.x
Kolozsvári, A. C., & Macedo, M. A. (2018). A relação entre suavização, persistência e a adoção dos IFRS. Revista Brasileira de Finanças-RBFin, 16(2), 251–284. https://doi.org/10.12660/rbfin.v16n2.2018.62269
Kothari, S. P., Leone, A. J., & Wasley, C. E. (2005). Performance matched discretionary accrual measures. Journal of Accounting and Economics, 39(1), 163–197. https://doi.org/10.1016/j.jacceco.2004.11.002
Koussis, N., & Makrominas, M. (2015). Growth options, option exercise and firms’ systematic risk. Review of Quantitative Finance and Accounting, 44, 243–267. https://doi.org/10.1007/s11156-013-0405-5
Koutoupis, A. G., Belesis, N. D., & Kampouris, C. G. (2022). Tax and COVID-19 pandemic effects on the financial performance and risk of the hotel industry. Corporate & Business Strategy Review, 3(2), 125–137. https://doi.org/10.22495/cbsrv3i2art11
Lambert, R., Leuz, C., & Verrecchia, R. E. (2007). Accounting information, disclosure, and the cost of capital. Journal of Accounting Research, 45(2), 385–420. https://doi.org/10.1111/j.1475-679X.2007.00238.x
Lei nº 11.638, de 28 de dezembro de 2007. (2007). Altera e revoga dispositivos da Lei nº 6.404, de 15 de dezembro de 1976, e da Lei nº 6.385, de 7 de dezembro de 1976, e estende às sociedades de grande porte disposições relativas à elaboração e divulgação de demonstrações financeiras. Presidência da República.
Leuz, C., Verrecchia, R. E. (2000). The economic consequences of increased disclosure. Journal of Accounting Research, 38, 91–124. https://doi.org/10.2307/2672910
Leuz, C., & Wysocki, P. D. (2016). The economics of disclosure and financial reporting regulation: Evidence and suggestions for future research. Journal of Accounting Research, 54(2), 525–622. https://doi.org/10.1111/1475-679X.12115
Li, S. (2010). Does mandatory adoption of International Financial Reporting Standards in the European Union reduce the cost of equity capital? The Accounting Review, 85(2), 607–636. https://dx.doi.org/10.2139/ssrn.1113353
Li, X., & Wibbens, P. D. (2023). Broken effects? How to reduce false positives in panel regressions. Strategy Science, 8(1), 103–116. https://doi.org/10.1287/stsc.2022.0172
Lintner, J. (1965). The valuation of risk assets and the selection of risky investments in stock portfolios and capital budgets. Review of Economics and Statistics, 47(1), 13–37. https://doi.org/10.2307/1926735
Ma, M. (2017). Economic links and the spillover effect of earnings quality on market risk. The Accounting Review, 92(6), 213–245. https://doi.org/10.2308/accr-51715
Mossin, J. (1966). Equilibrium in a capital asset market. Econometrica, 34(4), 768–783. https://doi.org/10.2307/1910098
Moura, A. A. F., Altuwaijri, A., & Gupta, J. (2020). Did mandatory IFRS adoption affect the cost of capital in Latin American countries? Journal of International Accounting, Auditing and Taxation, 38, 100301. https://doi.org/10.1016/j.intaccaudtax.2020.100301
Nguyen, H., Phan, T., & Ngo, V. (2022). The impact of the COVID-19 pandemic on the performance and risk profile of airline stocks. Contemporary Economics, 16(3), 283–298. https://doi.org/10.5709/ce.1897-9254.481
Opare, S., Houqe, M. N., & Van Zijl, T. (2021). Meta‐analysis of the impact of adoption of IFRS on financial reporting comparability, market liquidity, and cost of capital. Abacus, 57(3), 502–556. https://doi.org/10.1111/abac.12237
Peltzman, S. (1976). Toward a more general theory of regulation. The Journal of Law and Economics, 19(2), 211–240. https://doi.org/10.1086/466865
Piotroski, J. D. (2000). Value investing: The use of historical financial statement information to separate winners from losers. Journal of Accounting Research, 38(Supplement), 1–41. https://doi.org/10.2307/2672906
Randika, P. A. D. D. (2024). Assessing Systematic Risk through Accounting Information: Evidence from the Colombo Stock Exchange. European Journal of Business and Management Research, 9(2), 79–83. http://dx.doi.org/10.24018/ejbmr.2024.9.2.2305
Reina, D., Carvalho, L. , Reina, D., & Lemes, S. (2022). Adoção das IFRS no Brasil: Uma análise da comparabilidade dos relatórios financeiros e da acurácia das estimativas de consenso dos analistas. Revista Contabilidade Vista & Revista, 33(1), 41–65. https://doi.org/10.22561/cvr.v33i1.5748
Ronen, J., & Sadan, S. (1975). Classificatory smoothing: Alternative income models. Journal of Accounting Research, 13(2), 133–149. https://doi.org/10.2307/2490652
Saha, A., & Bose, S. (2021). Do IFRS disclosure requirements reduce the cost of capital? Evidence from Australia. Accounting & Finance, 61(3), 4669–4701. https://doi.org/10.1111/acfi.12744
Scalzer, R. S., Beiruth, A. X., & Reina, D. (2016). Adoção do ICPC01 e a Lei 12.783/13: Reflexos no reconhecimento dos ativos financeiros de concessão. Revista Universo Contábil, 12(3), 49–64. https://doi.org/10.4270/ruc.2016320
Sharpe, W. F. (1964). Capital asset prices: A theory of market equilibrium under conditions of risk. Journal of Finance, 19(3), 425–442. https://doi.org/10.1111/j.1540-6261.1964.tb02865.x
Siming, L. (2023). Does reporting quality affect systematic risk? Evidence from a regulatory lottery. Journal of Accounting and Public Policy, 42(4), 107116. https://doi.org/10.1016/j.jaccpubpol.2023.107116
Soliman, M. T. (2008). The use of DuPont analysis by market participants. The Accounting Review, 83(3), 823–853. https://doi.org/10.2308/accr.2008.83.3.823
Sousa, L. M., Castro, L. A., Júnior, D. B. C. V., Domingos, S. R. M., & Ponte, V. M. R. (2018). Conservadorismo condicional e adoção das IFRS: Uma análise nas empresas brasileiras de capital aberto. Enfoque: Reflexão Contábil, 37(3), 21–35. https://doi.org/10.4025/enfoque.v37i3.35390
Stigler, G. J. (1971). The theory of economic regulation. The Bell Journal of Economics and Management Science, 2(1), 3–21. https://doi.org/10.2307/3003160
Tenenwurcel, D. & De Camargos, M. (2022). Impacto da adoção das IFRS no custo de capital próprio de companhias brasileiras. Revista de Administração FACES Journal, 21(1), 45–59. https://orcid.org/0000-0001-5659-5486
Teodósio, I. R. M., Medeiros, J. T., de Vasconcelos, A. C., & De Luca, M. M. M. (2023). Qualidade das informações contábeis e risco sistemático no mercado acionário brasileiro. Revista Catarinense da Ciência Contábil, 22, e3357. https://doi.org/10.16930/2237-766220233357
Xing, X., & Yan, S. (2019). Accounting information quality and systematic risk. Review of Quantitative Finance and Accounting, 52, 85–103. https://doi.org/10.1007/s11156-018-0703-z
Watts, R. L. (1992). Accounting choice theory and market-based research in accounting. The British Accounting Review, 24(3), 235–267. https://doi.org/10.1016/S0890-8389(05)80023-X
Wu, S., & Xue, W. (2023). Accounting comparability and relative performance evaluation by capital markets. Journal of Accounting and Economics, 75(1), 101535. https://dx.doi.org/10.2139/ssrn.3409454
Published
How to Cite
Issue
Section
License
Copyright (c) 2025 Revista Catarinense da Ciência Contábil
This work is licensed under a Creative Commons Attribution 4.0 International License.
The copyright for articles published in this journal belongs to the author (s), with first publication rights assigned to Revista Catarinense da Ciência Contábil. Due to appearing in this publicly accessible journal, articles are free to use, with mandatory recognition of the original authorship and initial publication in this magazine and for educational and non-commercial applications. The magazine chose to use published works for non-commercial purposes, including the right to submit or work for publicly accessible databases. The content of published articles is the sole and exclusive responsibility of the authors. - The author (s) authorize (s) a publication of the article in the journal; - The author (s) guarantee (s) that a contribution is original and unpublished and that it is not being evaluated in another magazine (s); - A magazine is not responsible for the opinions, ideas and concepts emitted in the texts, for the full responsibility of the author (s); - It is reserved to the editors or the right to make textual adjustments and to adjust the article to the publication rules.
This work is licensed under a Creative Commons Atribuição-NãoComercial-CompartilhaIgual 4.0 Internacional.
