Title: Do comparable accounting choices produce comparable net profit and equity? Integrating the Gray's and Herfindahl H indices in measuring the comparability of Brazilian companies

Authors: Sirlei Lemes; Luciana De Almeida Araújo Santos

Addresses: Universidade Federal de Uberlândia, Av João Naves de Ávila, 2121 – Campus Santa Mônica, 38.400-902 – Uberlândia – MG, Brazil ' Universidade Federal de Uberlândia, Av João Naves de Ávila, 2121 – Campus Santa Mônica, 38.400-902 – Uberlândia – MG, Brazil

Abstract: The objective of this study was to determine whether industries with high comparability in 2009 net profit and equity also made comparable accounting choices in the adoption of IFRS, 2010 in Brazil. The sample consisted of 65 companies listed on BM&FBOVESPA. Eight items were identified to measure fair value and net realisable value and the Gray's and Herfindahl H indices were used to measure comparability among the 11 industries. The three measurements showed that none of the industries achieved high or material comparability. We found that adopting IFRS did not increase the comparability of Brazilian companies at first, nor did the comparability of figures in 2009 lead to lower dispersion of the policies adopted in 2010. However, no evidence was found to reject the null hypothesis that the averages of the residual values were the same. Despite advances in IASB convergence, substantial comparability problems remain, even within the same country.

Keywords: comparability; IFRS; convergence; accounting choice; H index; Herfindahl index; Gray's index; fair value; industry; Brazilian companies; BM&FBOVESPA; national differences.

DOI: 10.1504/IJAAPE.2019.106414

International Journal of Accounting, Auditing and Performance Evaluation, 2019 Vol.15 No.4, pp.334 - 354

Accepted: 28 Jul 2019
Published online: 30 Mar 2020 *

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