Persistence of Accounting Information in Regulated and Unregulated Firms in the Brazilian Economy
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Abstract
Objective: this study aims to analyze differences in the persistence of accounting information between firms operating in regulated and unregulated sectors of the Brazilian economy. Methods: the sample comprises, on average, 276 companies listed on B3, with data spanning from 2011 to 2022. Ordinary least squares (OLS) regression tests were performed, and a total of 20 models were analyzed. Persistence was measured using two different models, focusing on earnings, cash flows, and accruals. Fifteen dummy variables were constructed and grouped into four categories: regulation, purely economic vs. economic and accounting regulation, national regulatory agencies, standardized chart of accounts, and individual dummies for each regulated sector. Results: firms in the sample exhibit persistence in earnings, cash flows, and accruals. Regulated firms demonstrate higher earnings and cash flow levels compared to unregulated firms; however, these are less persistent, suggesting lower quality of accounting information in regulated sectors. Conclusions: the findings indicate that firms may prioritize performance at the expense of accounting information quality. These results support the development of regulatory policies and may aid the decision-making processes of investors and creditors.
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Rêgo, G. M. dos S., Souza, P. V. S. de, & Morais, H. C. B. (2025). Persistence of Accounting Information in Regulated and Unregulated Firms in the Brazilian Economy. Brazilian Administration Review, 22(3), e240168. https://doi.org/10.1590/1807-7692bar2025240168
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Research Articles
This work is licensed under a Creative Commons Attribution 4.0 International License.
References
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Nam, S. (2019). The role of accruals in the prediction of future earnings. Journal of Accounting and Finance, 19(7). https://articlearchives.co/index.php/JAF/article/view/43
Olojede, P., & Erin, O. (2021). Corporate governance mechanisms and creative accounting practices: the role of accounting regulation. International Journal of Disclosure and Governance, 18(3), 207-222. https://doi.org/10.1057/s41310-021-00106-4
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Pimentel, R. C., & Malacrida, M. J. C. (2020). Quarterly earnings, operating cash flow, and accruals in future performance assessment. Brazilian Administration Review, 17(4), e190115. https://doi.org/10.1590/1807-7692bar2020190115
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Wardhani, R., Utama, S., & Rossieta, H. (2015). The effect of governance system and degree of convergence to IFRS on the quality of financial reporting: Evidence from Asia. Corporate Ownership and Control, 12(4), 409-423. https://doi.org/10.22495/cocv12i4c3p8
Züger, T., & Asghari, H. (2023). AI for the public. How public interest theory shifts the discourse on AI. AI & Society, 38(2), 815-828. https://doi.org/10.1007/s00146-022-01480-5
Adams, T. L. (2022). What is the public interest in professional regulation? Canadian regulatory leaders’ views in a context of change. Professions and Professionalism, 12(3). https://doi.org/10.7577/pp.4962
Aquila, G., Pamplona, E. O., Ferreira Filho, J. A., Silva, A. S., Mataveli, J. V. A., Correa, J. E., Maria, M. S., & Garcia, G. C. (2019). Quantitative regulatory impact analysis: Experience of regulatory agencies in Brazil. Utilities policy, 59, 100931. https://doi.org/10.1016/j.jup.2019.100931
Betz, F., & Kim, M. (2021). Economic regulation and corporate governance: The case of wirecard. Modern Economy, 12(9), 1386-1423. https://doi.org/10.4236/me.2021.129072
Cline, B. N., Williamson, C. R., & Xiong, H. (2022). Trust, regulation, and market efficiency. Public Choice, 1-30. https://doi.org/10.1007/s11127-021-00945-3
Dechow, P., & Schrand, C. (2004). Earnings quality. CFA Digest, 34(4), 82-85.
Dechow, P., Ge, W., & Schrand, C. (2010). Understanding earnings quality: A review of the proxies, their determinants and their consequences. Journal of accounting and economics, 50(2-3), 344-401. https://doi.org/10.1016/j.jacceco.2010.09.001
Delis, M. D., Hasan, I., Iosifidi, M., & Li, L. (2018). Accounting quality in banking: The role of regulatory interventions. Journal of Banking & Finance, 97, 297-317. https://doi.org/10.1016/j.jbankfin.2018.10.005
Ferreira, A. C., & Souza, A. A. (2021). Determinantes do desempenho econômico-financeiro das operadoras de planos de saúde no brasil e sua relação com a qualidade das informações contábeis. Revista Universo Contábil, 17(4), 46-66. https://doi.org/10.21450/rahis.v16i1.4947
Holanda, A. P., & Coelho, A. C. D. (2020). Regulação econômica e decisão de investimento: Evidências no Brasil. REUNIR Revista de Administração Contabilidade e Sustentabilidade, 10(3), 27-36. https://www.reunir.revistas.ufcg.edu.br/index.php/uacc/article/view/786
Jeong, K. H., & Choi, S. U. (2019). Does real activities management influence earnings quality and stock returns in emerging markets? Evidence from Korea. Emerging Markets Finance and Trade, 55(12), 2834-2850. https://doi.org/10.1080/1540496X.2018.1535970
Kolozsvari, A. C., & Macedo, M. A. D. S. (2016). Análise da influência da presença da suavização de resultados sobre a persistência dos lucros no mercado brasileiro. Revista Contabilidade & Finanças, 27, 306-319. https://doi.org/10.1590/1808-057x201602610
Lei no. 11.638, de 28 de dezembro de 2007. (2007). Altera e revoga dispositivos da Lei nº 6.404/76, e da Lei nº 6.385/76, e estende às sociedades de grande porte disposições relativas à elaboração e divulgação de demonstrações financeiras. Diário Oficial da União, Brasília. http://www.planalto.gov.br/ccivil_03/_ato2007-2010/2007/lei/l11638.htm
Lorek, K. S., & Willinger, G. L. (2007). The contextual nature of the predictive power of statistically based quarterly earnings models. Review of Quantitative Finance and Accounting, 28, 1-22. https://doi.org/10.1007/s11156-006-0001-z
Ministério da Integração Nacional e do Desenvolvimento Regional. (2021, 14 de junho). Manual orientativo sobre a norma de referência n°1/ANA/2021: Cobrança pela prestação do serviço público de manejo de resíduos sólidos urbanos. Agência Nacional de Águas e Saneamento Básico e Ministério do Desenvolvimento Regional. 110 p. https://www.gov.br/ana/pt-br/assuntos/saneamento-basico/normativos-publicados-pela-ana-para-o-saneamento-basico/resolucao-ana-no-79-2021-1/manual-orientativo-sobre-a-norma-de-referencia-no-1.pdf
Medida Provisória n° 884, de 6 de julho de 2018. (2018, 6 de julho). Atualiza o marco legal do saneamento básico e altera a Lei nº 9.984, de 17 de julho de 2000, para atribuir à Agência Nacional de Águas competência para editar normas de referência nacionais sobre o serviço de saneamento. Presidente da República. https://pesquisa.in.gov.br/imprensa/jsp/visualiza/index.jsp?jornal=515&pagina=1&data=09/07/2018&totalArquivos=104
Melo, J. R. A., & Cavalcante, P. R. N. (2016). Outros resultados abrangentes: Uma perspectiva do conservadorismo condicional e persistência de empresas do setor elétrico brasileiro. Revista Conhecimento Contábil, 2(2). https://periodicos.apps.uern.br/index.php/RCC/article/view/829
Monticelli, J. M., Verschoore, J. R., & Garrido, I. L. (2023). The emergence of coopetition in highly regulated industries: A study on the Brazilian private healthcare market. Industrial Marketing Management, 108, 35-46. https://doi.org/10.1016/j.indmarman.2022.11.007
Nam, S. (2019). The role of accruals in the prediction of future earnings. Journal of Accounting and Finance, 19(7). https://articlearchives.co/index.php/JAF/article/view/43
Olojede, P., & Erin, O. (2021). Corporate governance mechanisms and creative accounting practices: the role of accounting regulation. International Journal of Disclosure and Governance, 18(3), 207-222. https://doi.org/10.1057/s41310-021-00106-4
Oktavia, M., & Susanto, Y. K. (2022). The determinant factors of earnings persistence. Jambura Equilibrium Journal, 4(1). https://doi.org/10.37479/jej.v4i1.13087
Pimentel, R. C., & Malacrida, M. J. C. (2020). Quarterly earnings, operating cash flow, and accruals in future performance assessment. Brazilian Administration Review, 17(4), e190115. https://doi.org/10.1590/1807-7692bar2020190115
Rahman, S. (2023). Narrative tone and earnings persistence. Journal of International Accounting, Auditing and Taxation, 52, 100562. https://doi.org/10.1016/j.intaccaudtax.2023.100562
Shi, X., Wang, J., & Ren, X. (2023). Share pledging and earnings informativeness. International Journal of Accounting & Information Management, 31(2), 270-299. https://doi.org/10.1108/IJAIM-09-2022-0195
Silva, C. A., & Nelson, R. A. R. R. (2015). Uma análise do aspecto regulador do Estado brasileiro à luz do papel das agências reguladoras. Revista de Direito Administrativo, 268, 153-185 https://doi.org/10.12660/rda.v268.2015.50738
Silva, J. D., Bonfim, M. P., Gonçalves, R. D. S., & Niyama, J. K. (2018). Qualidade do lucro versus governança corporativa: uma análise das companhias de utilidade pública listadas na b3. Contabilidade Vista & Revista, 29(1), 48-76. https://doi.org/10.22561/cvr.v29i1.3680
Souza, P. V. S., Ribeiro, J. P. M., & Paulo, E. (2024). Organizational complexity and value relevance under the regulatory and financial standards of Brazilian electric power companies. Energy Policy, 186, 114000. https://doi.org/10.1016/j.enpol.2024.114000
Suharsono, R. S., Nirwanto, N., & Zuhroh, D. (2020). Voluntary disclosure, financial reporting quality and asymmetry information. Journal of Asian Finance, Economics and Business, 7(12), 1185-1194. https://eprints.unmer.ac.id/id/eprint/3357
Stigler, G. J. (1971). The theory of economics regulation. The Bell Journal of Economics and Management Science, 2(1), 3-21. https://doi.org/10.2307/3003160
Thomas, D. W., & Thomas, M. D. (2022). Regulation, competition, and the social control of business. Public Choice, 193(1), 109-125. https://doi.org/10.1007/s11127-022-00989-z
Wardhani, R., Utama, S., & Rossieta, H. (2015). The effect of governance system and degree of convergence to IFRS on the quality of financial reporting: Evidence from Asia. Corporate Ownership and Control, 12(4), 409-423. https://doi.org/10.22495/cocv12i4c3p8
Züger, T., & Asghari, H. (2023). AI for the public. How public interest theory shifts the discourse on AI. AI & Society, 38(2), 815-828. https://doi.org/10.1007/s00146-022-01480-5