CONSERVATISM IN ACCOUNTING RESULTS PUBLISHED IN BRAZIL: A COMPARISON BETWEEN PRIVATELY AND PUBLICLY HELD COMPANIES

Abstract

The practice of conservatism in reported earnings of Brazilian privately held corporations and public companies is analyzed. The accounting normative structure is differentiated for these groups in view of regulatory actions made by the CVM; this would imply diverse conservatism levels for both. However, the hypothesis adopted is that there is no differentiation between informational qualities (measured by conservatism) in the accounting reports for both types of firms. An institutional environment of low incentive and low level of protection to the investors in the stock market does not induce demand for reports with informational efficiency in the public corporations (BALL, 2001; WATTS, 2003). The research’s tests make use of regressions developed by Basu (1997) and Ball and Shivakumar (2005). Research outcomes support the hypothesis of reduced level of conservatism. The evidence was tested using concepts of asymmetrical timely anticipation of economic losses and conditional conservatism; the data base of SERASA supported this evidences (2,833 firms, covering the period from 1995 to 2004).