Effects of the Audit Committee and the Fiscal Council on Earnings Quality in Brazil

Baioco, Vitor Gomes, & Almeida, José Elias Feres de. (2017). Effects of the audit committee and the fiscal council on earnings quality in Brazil. Revista Contabilidade & Finanças, Epub 27 de maro de 2017. doi/10.1590/1808-057x201703250

Posted: 29 Mar 2017

See all articles by Vitor Baioco

Vitor Baioco

Federal University of Espirito Santo

Jose Elias Feres de Almeida

Federal University of Espirito Santo (UFES)

Date Written: March 28, 2017

Abstract

This study evaluates the effects of the audit committee and the fiscal council with their different characteristics on earnings quality in Brazil. The proxies of earnings quality used are: relevance of accounting information, timeliness, and conditional conservatism. The sample consists of Brazilian companies listed on the Brazilian Securities, Commodities, and Futures Exchange (BM&FBOVESPA) with annual liquidity above 0.001 within the period from 2010 to 2013. Data were collected from the database Comdinheiro and the Reference Forms of companies available on the website of the Brazilian Securities and Exchange Commission (CVM) or the BM&FBOVESPA. The samples used in the study totaled 718, 688, and 722 observations for the value relevance, timeliness, and conditional conservatism models, respectively. The results indicate that different arrangements of the fiscal council and the existence of the audit committee differently impact the accounting information properties. The presence of the fiscal council positively impacted the relevance of equity, while the presence of the audit committee, the relevance of earnings. Conditional conservatism is evidenced in the group of companies with a permanent fiscal council, demonstrating that it is significant as a governance mechanism, rather than the installation for temporary operation when asked by shareholders in an ordinary general meeting. The presence of both showed significant earnings for the market, but they were not timely, something which exposes restriction to the relevance found. Lastly, the powered fiscal council showed a positive association only concerning the relevance of equity.

Keywords: earnings quality, fiscal council, audit committee, corporate governance, powered fiscal council

JEL Classification: G3, G34, M4, M40, M41

Suggested Citation

Baioco, Vitor and Almeida, Jose Elias Feres de, Effects of the Audit Committee and the Fiscal Council on Earnings Quality in Brazil (March 28, 2017). Baioco, Vitor Gomes, & Almeida, José Elias Feres de. (2017). Effects of the audit committee and the fiscal council on earnings quality in Brazil. Revista Contabilidade & Finanças, Epub 27 de maro de 2017. doi/10.1590/1808-057x201703250, Available at SSRN: https://ssrn.com/abstract=2942215

Vitor Baioco

Federal University of Espirito Santo

Av. Fernando Ferrari, 514
Vitória, Espirito Santo 29075
Brazil

Jose Elias Feres de Almeida (Contact Author)

Federal University of Espirito Santo (UFES) ( email )

Av. Fernando Ferrari, n. 514, Goiabeiras
Centro de Ciências Jurídicas e Econômicas
Vitoria, Espírito Santo 29075-910
Brazil
+5527992248737 (Phone)

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