Relationship between Conservatism and Earnings Smoothing after the Adoption of IFRS in Brazilian Companies




Conservatism, Earnings Smoothing, Adoption of IFRS


Objective: Motivated by research that showed the increase in earnings smoothing levels may be due to the managers conservative behavior, this study aims to analyze the relationship between conservatism and earnings smoothing after mandatory IFRS implementation.

Method: Descriptive, documentary, and quantitative research was carried out. A balanced sample of 92 publicly Brazilian companies were analyzed during the period from 2000 to 2018, with the period before (2000 to 2009) and after the mandatory implementation of IFRS (2010 to 2018). The variables used in the research were collected from the Refinitiv Eikon database.

Results: The results showed an increase in the level of accounting conservatism and earnings smoothing of companies in the post-IFRS period and this increase in the level of smoothing was not related to changes in the timely recognition of gains and losses. This conclusion was reached because the level of conservatism of companies increased after the adoption of IFRS, but did not affect the negative correlation between accruals and cash flow, a measure of income smoothing.

Contribution: This is the first research in the Brazilian context to demonstrate that after the implementation of IFRS, there was an increase in income smoothing that is not related to changes in conditional conservatism. This fact may indicate a lower quality of accounting information, requiring analysts, investors and regulators to pay attention to the analysis of accounting reports, after the implementation of IFRS in Brazil.


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Author Biography

Daiani Schlup, Universidade Regional de Blumenau - FURB

Doutoranda no Programa de Pós Graduação em Ciências Contábeis da FURB


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How to Cite

Schlup, D., Soschinski, C. K., Klann, R. C. ., & Silva, R. S. R. (2022). Relationship between Conservatism and Earnings Smoothing after the Adoption of IFRS in Brazilian Companies. Advances in Scientific and Applied Accounting, 15(1).

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