The relationship between accounting information quality and market value in Brazilian companiesAbstract
Purpose This study investigates the relationship between accounting information quality and market value in publicly traded Brazilian companies, highlighting the impact of high-quality financial reporting on valuation and investor decision-making.
Theoretical framework Building on international research, the study examines how accounting information quality, firm size, growth, leverage, and dividends influence market valuation.
Design/methodology/approach The analysis is based on an unbalanced panel of 317 non-financial publicly traded companies listed on the Brazilian Stock Exchange (B3) from 2011 to 2020, totaling 2,246 firm-year observations. Short panel regression with firm fixed effects, year dummies, and clustered robust standard errors was employed using the market-to-book ratio as a proxy for market value.
Findings The results show a significant positive relationship between accounting information quality and market value. Market value is also positively affected by firm size and growth, but negatively affected by leverage and dividend yield. Capital expenditures and return on equity were not statistically significant.
Practical & social implications of research The findings underscore the importance of transparent and reliable financial reporting to foster investor confidence and improve valuation. The study suggests that enhancing corporate governance and incentives for accounting quality can further strengthen the Brazilian capital market.
Originality/value This research contributes to the literature on emerging markets by providing robust empirical evidence of the impact of accounting information quality on market valuation in Brazil, complementing international studies and evidencing advances in Brazilian corporate governance practices.
Keywords:
Earnings quality; market valuation; accruals; corporate governance