Intangible Assets and Conservatism in the Brazilian Stock Market
DOI:
https://doi.org/10.17524/repec.v17i1.3164Keywords:
intangible assets, intangibility, conservatism, earnings qualityAbstract
Objective: This study’s objective was to analyze the influence of the level of intangibility on accounting conservatism. Evidence was considered that the valuation of shares might influence discretionary accounting practices and that recorded intangible assets may improve the quality of information. Method: 92 publicly traded Brazilian companies were analyzed between 2014 and 2019. The empirical models adopted were those of Basu (1997) and Ball and Shivakumar (2005). Two aspects of intangibility were considered: (i) the relationship between the shares’ market value and book value; and (ii) accounted intangible assets. Data were processed using panel data regression.
Results: Intangibility based on market value showed a negative relationship with conservatism. On the other hand, intangibility based on book value showed a positive relationship. Additionally, companies with greater intangibility based on market value did not show the conservatism attribute. It was also found that companies with a higher proportion of recorded intangible assets showed more significant conservatism. Contributions: This paper contributes to the academic milieu, regulatory agents, and investors, as it helps understand the influence of intangible assets on the quality of accounting information.
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