Investigation
Evolution of balance sheet conservatism in Argentina and Chile: the IFRS incidence
Categories
Published 2017-06-10
Keywords
- Accounting Conservatism,
- IFRS
How to Cite
Verón Medina, C. S., & Marcolini Tulliani, S. B. . (2017). Evolution of balance sheet conservatism in Argentina and Chile: the IFRS incidence. CAPIC REVIEW, 15, 87–97. https://doi.org/10.35928/cr.vol15.2017.16
Abstract
The implementation of IFRSs raised the question about the improvement in the quality of the financial information under these standards respected to the local standards of each country that adopts them. The quality of information can be measured on the systematic undervaluation of the net book value in relation to the market value of the company. The research focus on the relationship between financial statement under IFRS are more conservative than financial statements under local GAAP.
This paper analyzes the evolution of conservatism in Argentina and Chile, and also analyzes if the implementation of IFRS has influenced the conservative accounting practices of listed companies in these countries. One of the measures of unconditional conservatism is the relationship between the book value and the market value of the company. This relationship is observed through the Market to Book (MTB) ratio, which with values higher than one would reflect the existence of accounting conservatism. The paper presents a longitudinal study that covers pre and post IFRS periods, by comparing the MTB ratio of these periods through a comparison test of means (Argentina 2008-2016, Chile 2003-2016). The data used for the analysis were from the Thompson One database.
The results show that the implementation of IFRS in Argentina increased the conservative bias in the preparation of the financial statements but in Chile decreased.
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References
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29. POPE, P.F. & WALKER, M. (2003). “Ex-ante and ex-post accounting conservatism, asset recognition and asymmetric earnings timeliness”, Working paper, Lancaster University and University of Manchester.
30. RUEDA, J. (2006). “Prudencia del resultado bajo normas internacionales de contabilidad: un estudio comparado en Europa”, Cuadernos de Estudios
31. Empresariales, 16, 55-79.
32. RYAN, S. (1995). “Model of Accrual Measurement with Implications for the Evolution of the Book-to-Market Ratio”, Journal of Accounting Research, Spring, 96-112.
33. WATTS, R. L. (2002). “Conservatism in Accounting Part I: explanations and implications”, Accounting Horizons, 17(3), 207-221.
34. WATTS, R. L. (2002). “Conservatism in Accounting Part II: evidence and research opportunities”, Accounting Horizons, 17(4), 287-301.
35. WATTS, R.L. & ZIMMERMAN, J.L. (1978). “Towards a positive theory of the determination of accounting standards”, Accounting Review, 53 (1), 112-134.
36. WATTS, R.L. & ZIMMERMAN, J.L. (1986). PositiveAccounting Theory, Prentice Hall International, London.
37. ZHANG, X. (2000). “Conservative accounting and equity valuation”, Journal of Accounting and Economics, 29, 125-149.
2. BASU, S. (1997). “The conservatism principle and the asymmetric timeliness of earnings”, Journal of Accounting and Economics, 24, 3-37.
3. BEAVER, W.H. & RYAN, S.G. (2000). ”Biases and lags in book value and their effects on the ability of the book-to-market ratio to predict book return on equity”, Journal of Accounting Research, 38, 127-148.
4. BELKAOUI, A. (1993). Accounting theory, Tercera edición, Harcourt Brace Jovanovich, Orlando, Florida.
5. CALLAO, S., JARNE, J. & LAINEZ, J. (2007). “Adoption IFRS in Spain. Effect pm the comparability and relevance of financial reporting”, Journal of International Accounting, Auditing and Taxation, 16(2) 148-178.
6. FELTHAM, G.A. & OHLSON, J.A. (1995). “Valuation and clean surplus accounting for operating and financial activities”, Contemporary Accounting Research, 11, 689-731.
7. GARCIA, J.M. & MORA, A. (2002). “Balance Sheet vs. Earningsconservatism in Europe”, XXV Congreso de la Asociación Europea de Contabilidad, Copenhagen.
8. GARCIA, J.M. & MORA, A. (2004). “Balance Sheet vs. Earnings conservatism in Europe”, European Accounting Review, 13(2), 261-292.
9. GARCIA, J.M., RUEDA, J.A. & VAZQUEZ, P. (2008). “Conservadurismo del resultado contable bajo las Normas Internacionales de Contabilidad. Un estudio comparativo”, Revista Española de Financiación y Contabilidad, XXXVII(138), 197-210.
10. GARCIA, J.M. & MORA, A. (2003). “La incorporación asimétrica de noticias al resultado contable en un contexto europeo: evidencia empírica”, Revista Española de Financiación y Contabilidad, XXXII(116), 235-264.
11. GARCIA J.M., GARCIA, B. y PEÑALVA, F. (2014). “Information consequences of accounting conservatism”. European Accounting Review,
12. 23(2), 173-198.
13. GARCÍA, J.M. (2002).”Conservadurismo contable en Europa”, Tesis Doctoral, UV.
14. GARCIA-OSMA, B. & POPE, P. (2011). Strategic balance sheet adjustments under first.time IFRS adoption and the consequences for earnings quality, Working Paper, January, Available at http://dx.doi.org/10.2139/ssrn.1735009
15. GARRIDO, P & VAZQUEZ, P. (2011). “The transition to international financial reporting standards in Spain: relevance and timeliness of adjustments”, International Journal of Accounting, Auditing and Performance Evaluation, 7(4), 287-302.
16. GIGLER, F.B. & HEMMER, T. (2001). “Conservatism, optimal disclosure policy, and the timeliness of financial reports”, The Accounting Review, 76, 471-493.
17. GINER, B. (2001); “La utilidad de la información contable desde la perspectiva del mercado: ¿evolución o revolución en la investigación?”, Revista de Contabilidad, 4(7), 21-52.
18. GIVOLY, D. & HAYN, C. (2000). “The changing time-series properties of earnings, cash flows and accruals: Has financial reporting become more conservative?”, Journal of Accounting and Economics, 29, 287-320.
19. HJELSTRÖM, A. & SCHUSTER, W. (2011). “Standards, management incentives and accounting practice-lessons from the IFRS transition in Sweden”, Accounting in Europe, 8(1), 69-88.
20. HORTON, J. & SERAFEIM, G. (2010). “Market reaction to and valuation of IFRS reconciliation adjustments: first evidence from the UK”; Review of Accounting Studies, 15(4); 725-751.
21. INTERNATIONAL ACCOUNTING STANDARDS BOARD, IASB (1999). “Marco conceptual para la preparación y presentación de los estados financieros”,
22. Instituto Mexicano de Contadores Públicos, México.
23. IÑIGUEZ, R., POVEDA, F. & VAZQUEZ, P. (2013). “Evolución del conservadurismo de balance con la implantación de las Normas Internacionales de Información Financiera: aplicación al caso de España”, Revista Española de Financiación y Contabilidad, XLII(160) 453-486.
24. JOOS, P.R. (1997). The stock market valuation of earnings and book value across international accounting systems, Tesis Doctoral, UMI.
25. JOOS, P.R. & LANG, M. (1994). “The effects ofaccounting diversity: evidence from the European Union”, Journal of Accounting Research, 32, 141-168.
26. MODIGLIANI, F., & MILLER, M. (1958). “The Cost of Capital, Corporation Finance and the Theory of Investment”, The American Economic Review, 48(3), 261-297.
27. OHLSON, J.A. (1995). “Earnings, book values, and dividends in equity valuation”, Contemporary Accounting Research, 11, 661-687.
28. POPE, P.F. & WALKER, M. (1999). “International differences in the timeliness, conservatism and classification of earnings”, Journal of Accounting Research, 37, supplement, 53-87.
29. POPE, P.F. & WALKER, M. (2003). “Ex-ante and ex-post accounting conservatism, asset recognition and asymmetric earnings timeliness”, Working paper, Lancaster University and University of Manchester.
30. RUEDA, J. (2006). “Prudencia del resultado bajo normas internacionales de contabilidad: un estudio comparado en Europa”, Cuadernos de Estudios
31. Empresariales, 16, 55-79.
32. RYAN, S. (1995). “Model of Accrual Measurement with Implications for the Evolution of the Book-to-Market Ratio”, Journal of Accounting Research, Spring, 96-112.
33. WATTS, R. L. (2002). “Conservatism in Accounting Part I: explanations and implications”, Accounting Horizons, 17(3), 207-221.
34. WATTS, R. L. (2002). “Conservatism in Accounting Part II: evidence and research opportunities”, Accounting Horizons, 17(4), 287-301.
35. WATTS, R.L. & ZIMMERMAN, J.L. (1978). “Towards a positive theory of the determination of accounting standards”, Accounting Review, 53 (1), 112-134.
36. WATTS, R.L. & ZIMMERMAN, J.L. (1986). PositiveAccounting Theory, Prentice Hall International, London.
37. ZHANG, X. (2000). “Conservative accounting and equity valuation”, Journal of Accounting and Economics, 29, 125-149.
