Analysis of discontinued operations in Brazil after IFRS 5 adoption

Authors

  • Adolfo Henrique Coutinho e Silva Universidade Federal do Rio de Janeiro – FACC/UFRJ
  • Carlos Eduardo Vieira da Silva Petrobras, Rio de Janeiro-RJ, Brasil
  • Moacir Sancovschi Universidade Federal do Rio de Janeiro – FACC/UFRJ
  • José Alonso Borba Universidade Federal de Santa Catarina – UFSC

DOI:

https://doi.org/10.19094/contextus.v16i3.39903

Keywords:

discontinued operations, firms performance, earnings management, positive accounting theory, IFRS.

Abstract

In this paper we analyzed the effect size and frequency of Brazilian discontinued operations as well as the managers’ justifications presented in the current and annual reports for discontinued operations. Our study comprises the analysis of 191 discontinued operations disclosed by Brazilian companies after the IFRS adoption, for the period from 2010 to June 2016. We hand-collected the reasons for discontinued operations based on management’s explanations provided in the current and annual reports. We performed a qualitative (content analysis) and quantitative (contingency table and nonparametric statistical tests) data analysis. Consistent with the Theory of Corporate Scandals, our results show that there was no evidence that Brazilian companies made opportunistic decisions to discontinue operations in order to increase their core income. Our study extends the literature in two ways: first, by providing new evidence about the impacts of IFRS 5 adoption in a developing market; second, by showing that adopting the forward-looking approach based on managers’ intention does not relate to opportunistic decisions.

Author Biographies

Adolfo Henrique Coutinho e Silva, Universidade Federal do Rio de Janeiro – FACC/UFRJ

Doutor em Ciências Contábeis – Universidade de São Paulo – FEA/USP, São Paulo-SP, Brasil
Professor adjunto da Universidade Federal do Rio de Janeiro – FACC/UFRJ, Rio de Janeiro-RJ, Brasil

Carlos Eduardo Vieira da Silva, Petrobras, Rio de Janeiro-RJ, Brasil

Mestre em Ciências Contábeis – Universidade Federal do Rio de Janeiro – FACC/UFRJ, Rio de Janeiro, Brasil
Contador – Petrobras, Rio de Janeiro-RJ, Brasil

Moacir Sancovschi, Universidade Federal do Rio de Janeiro – FACC/UFRJ

Doutor em Administração – Universidade Federal do Rio de Janeiro – COPPEAD/UFRJ, Rio de Janeiro-RJ, Brasil
Professor emérito da Universidade Federal do Rio de Janeiro – FACC/UFRJ, Rio de Janeiro-RJ, Brasil

José Alonso Borba, Universidade Federal de Santa Catarina – UFSC

Doutor em Ciências Contábeis – Universidade de São Paulo – FEA/USP, São Paulo-SP, Brasil
Professor titular da Universidade Federal de Santa Catarina – UFSC, Florianópolis-SC, Brasil

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Published

2018-12-12

How to Cite

Coutinho e Silva, A. H., Vieira da Silva, C. E., Sancovschi, M., & Borba, J. A. (2018). Analysis of discontinued operations in Brazil after IFRS 5 adoption. Contextus - Contemporary Journal of Economics and Management, 16(3), 8–39. https://doi.org/10.19094/contextus.v16i3.39903

Issue

Vol. 16 No. 3: set/dez 2018

Section

Articles

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