The effects of IFRS 16 adoption on the Value Relevance of EBITDA: a study on Latin-American public firms
DOI:
https://doi.org/10.14392/asaa.2025180111Keywords:
Value Relevance, IFRS 16, Leasing, EBITDAAbstract
Objective: To assess how the changes in the accounting for operating leases introduced by IFRS 16 affected the value relevance of EBITDA in Latin American companies.
Method: The study used 2,432 firm-year observations from Brazilian (1,344), Chilean (628), and Mexican (460) companies, divided into two periods: before and after the adoption of IFRS 16. To assess the impact of the standard, ordinary least squares regression with firm and year fixed effects was applied.
Results: There was no increase in the informational relevance of EBITDA after IFRS 16 (Brazil and Mexico). However, when considering firm- and country-specific effects, EBITDA's relevance increased, suggesting that the impact of the new standard on the relevance of information is linked to specific characteristics of the companies and countries analyzed, rather than to a general condition affecting all companies.
Contributions: The study highlights different forms of implementation and interpretation of the standard by country, which may compromise the comparability of financial statements. The findings reinforce that investors should carefully observe how different sectors and countries are affected by new standards; for regulators, the results support the monitoring of implementation across different jurisdictions; and companies should report EBITDA with caution, as it may influence stock pricing, especially when a newly issued standard has significant impacts on its values.
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Copyright (c) 2025 Denis Gurgel Sanches Campoi, Samantha Valentim Telles
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