The Determinants of Firm-Specific Corporate Governance Arrangements, IFRS Adoption and the Informativeness of Accounting Reports: Evidence from Brazil

In this study we investigate the complementary effect of firm-level incentives and IFRS adoption on the informativeness of accounting reports in Brazil.Using a specially constructed corporate governance index - Brazilian Corporate Governance Index (BCGI) - we show that the quality of corporate governance is linked to the growth opportunities firms face. Consistent with the argument that accounting numbers are essential elements of corporate governance arrangements, We show that improvements in corporate governance are associated with economically material and statistically significant improvements in indicators of accounting quality. We also show that corporate governance quality and accounting quality are also positively affected by cross-listing, but cross-listing is not the only driver of either of these quality choices. Our results also show that IFRS adoption leads to an increase in the informativeness of accounting reports in Brazil especially for firs which did no possess the ex-ante incentives to produce high quality financials.