Abstract
This paper investigates the effect of state ownership on the conditional conservatism of financial
reports of Brazilian banks. State controlled banks in Brazil face additional monitoring from
government authorities and managers risk litigation as individuals with potential effects on their
personal wealth. Thus we hypothesize that state ownership would have a positive marginal effect on
conditional conservatism in this institutional environment. Using a times series conditional
conservatism model our results confirm our expectations and show that state ownership has a positive
effect on the conditional conservatism of earnings in Brazil. Using a logit model we also corroborate
this effect after controlling for the effect of unconditional conservatism and earnings smoothing.
reports of Brazilian banks. State controlled banks in Brazil face additional monitoring from
government authorities and managers risk litigation as individuals with potential effects on their
personal wealth. Thus we hypothesize that state ownership would have a positive marginal effect on
conditional conservatism in this institutional environment. Using a times series conditional
conservatism model our results confirm our expectations and show that state ownership has a positive
effect on the conditional conservatism of earnings in Brazil. Using a logit model we also corroborate
this effect after controlling for the effect of unconditional conservatism and earnings smoothing.
| Original language | English |
|---|---|
| Pages (from-to) | 71-88 |
| Number of pages | 8 |
| Journal | Journal of Governance & Regulation |
| Volume | 2 |
| Issue number | 1 |
| DOIs | |
| Publication status | Published - 2013 |