Luiz Felipe de Araújo Pontes Girão

Accounting Information Quality in Latin- and North-American Public Firms

Purpose: We analyze the quality of accounting information reported by public firms in Latin-America and United States of America.Methodology/approach: To reach our objective, an exploratory and descriptive research was developed. To analyze the dimensions of accounting information quality, the operational model present in literature were applied which assess the persistence in earnings (Dechow and Schrand, 2004), the level of conservatism (Ball and Shivakumar, 2005), accounting earnings management (Pae, 2005) and accruals quality measurement (Dechow and Dichev, 2002), in a sample composed of publicly traded companies in the markets of Latin America and the North America (represented by USA), totaling 2,526 companies, from 2005 to 2011.Findings: Our results evidenced that financial reporting of Latin-American companies are less conservative (except for Brazilian companies) and has similar level of earnings management in comparison to the North-American ones. Concerning to the quality of accruals it was observed that there are significant differences especially related to accruals of Brazilian companies. Practical Implications: Our results suggest differences in the quality of accounting information, originated by the economic environment where the company is inserted. So, investors must be careful when they are comparing firms between these markets, because the results were different for some cases, which may lead the investors to make misallocation of his resources.Originality/Value of paper: We expanded previous literature by the use of various proxies for accounting quality, comparing firms on emerging markets with the major capital market (USA), and the crises period of time.