Uniformity and comparability: an analysis of the relevance for the Brazilian capital market

Guimarães, Emanuelle Frasson; Rover, Suliani

doi:10.1590/1808-057x202112890

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Revista Contabilidade & Finanças

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Original Article • Rev. contab. finanç. 33 (89) • May-Aug 2022 • https://doi.org/10.1590/1808-057x202112890 copy

Uniformity and comparability: an analysis of the relevance for the Brazilian capital market^* * The authors are grateful to the Coordination for the Improvement of Higher Education Personnel (Capes) for its financial support in carrying out this research.

Authorship SCIMAGO INSTITUTIONS RANKINGS

ABSTRACT

This research aimed to analyze the relationship between the characteristics of uniformity and comparability and the fundamental qualitative characteristic of relevance of financial reports for the Brazilian capital market, discussing the possibility of a trade-off between comparability and relevance, the importance of considering both comparability and relevance to maximize the utility of financial statements, and the gaps regarding the “effectiveness” of uniformity and achieving comparability to the detriment of relevance. It is important to investigate the “effectiveness” of uniformity in terms of the utility of the decision due to the confusion that exists between the concepts of uniformity and comparability. The results will encourage regulatory bodies to reflect on the confusion that exists between uniformity and comparability and on fulfilling the characteristics of relevance and comparability, indicating what the relationship is between these from the viewpoint of the capital market. Uniformity is identified by means of the earnings covariance measure and comparability via the accounting function similarity measure. The relevance models are assessed using panel data regressions covering the period from 2013 to 2018. The sample includes companies from the B3 S.A. - Brasil, Bolsa, Balcão belonging to sectors classified in the Level 2 North American Classification System (NAICS) that comprise at least two companies. The results indicated that uniformity is not relevant for the Brazilian capital market, even when it contributes to comparability. These can be explained by the possible production of superficial comparability. They also revealed that comparability is relevant and positively related to the share price. However, the inclusion of this variable led to a decrease in explanatory power, which may indicate the achievement of comparability to the detriment of relevance. Finally, it is revealed that the Brazilian capital market distinguishes between the concepts of uniformity and comparability when evaluating companies.

Keywords:
uniformity; comparability; relevance

Period	2013	2014	2015	2016	2017	2018	General
MUNIF
N	267	277	281	286	287	287	1.685
Mean	0.11061	0.11497	0.12156	0.12526	0.11781	0.10896	0.11659
Standard deviation	0.06931	0.07471	0.08503	0.09143	0.07967	0.07628	0.07994
Minimum	0.00137	0.00054	0.00214	0.00105	0.0032	0.00219	0.00054
Maximum	0.40832	0.42368	0.40856	0.44887	0.43769	0.42311	0.44887
MCOMP
N	109	109	110	111	123	119	681
Mean	-2.97079	-3.71166	-3.20032	-3.79132	-3.65527	-3.39488	-3.45793
Standard deviation	2.54033	2.89171	2.18009	2.96032	2.73787	2.64924	2.67959
Minimum	-12.71556	-13.34296	-11.14165	-13.2578	-13.97874	-13.82101	-13.97874
Maximum	-0.48729	-0.56217	-0.58505	-0.19852	-0.17546	-0.2871	-0.17546

Variable	N	Mean	Standard deviation	Minimum	Maximum
$P_{i t} = α_{0} + {β_{1} N E}_{i t} + {β_{2} N I}_{i t} + {β_{3} M U N I F}_{i t} {+ ε}_{i t}$ (equation 9)
P	1.051	13.67829	11.39947	0.00391	61.10815
NE	1.051	11.19948	11.96531	-41.22084	66.10306
NI	1.051	0.82223	2.01765	-7.70807	10.54925
MUNIF	1.051	0.12377	0.09509	0.00054	0.54339

$P_{i t} = α_{0} + {β_{1} N E}_{i t} + {β_{2} N I}_{i t} + {β_{3} M U N I F x M C O M P}_{i t} {+ ε}_{i t}$ (equation 10)
P	617	13.52538	10.24952	0.00391	61.10815
NE	617	11.46452	10.92514	-41.22084	58.58801
NI	617	0.8471	1.85694	-7.70807	7.69407
MUNIF×MCOMP	617	-0.40024	0.39386	-2.28104	-0.00037

$P_{i t} = α_{0} + {β_{1} N E}_{i t} + {β_{2} N I}_{i t} + {β_{3} M C O M P}_{i t} {+ ε}_{i t}$ (equation 11)
P	605	13.49111	10.08761	0.00391	57.33266
NE	605	11.54259	10.64398	-16.7191	58.58801
NI	605	0.8432	1.85022	-7.70807	7.69407
MCOMP	605	-3.34111	2.67319	-16.08592	-0.17546

$P_{i t} = α_{0} + {β_{1} N E}_{i t} + {β_{2} N I}_{i t} + {β_{3} M U N I F}_{i t} {+ ε}_{i t}$ (equation 9)				$P_{i t} = α_{0} + {β_{1} N E}_{i t} + {β_{2} N I}_{i t} + ε_{i t}$ (equation 8)
Variable	Coefficient	Z statistic	p-value	Variable	Coefficient	Z statistic	p-value
Panel A				Panel A
NE	0.06645	1.30	0.193	NE	0.06635	1.30	0.195
NI	0.93725	3.86	0.000	NI	0.93624	3.85	0.000
MUNIF	-2.01035	-0.72	0.473
Constant	12.79787	12.23	0.000	Constant	12.55205	13.80	0.000
Panel B				Panel B
R² within	0.0400	Wald chi²	21.65	R² within	0.0399	Wald chi²	19.79
R² between	0.0647	Prob > chi²	0.0001	R² between	0.0626	Prob > chi²	0.0001
R² overall	0.0912	N	1.051	R² overall	0.0891	N	1.051

$P_{i t} = α_{0} + {β_{1} N E}_{i t} + {β_{2} N I}_{i t} + {β_{3} M U N I F x M C O M P}_{i t} {+ ε}_{i t}$ (equation 10)				$P_{i t} = α_{0} + {β_{1} N E}_{i t} + {β_{2} N I}_{i t} + ε_{i t}$ (equation 8)
Variable	Coefficient	Z statistic	p-value	Variable	Coefficient	Z statistic	p-value
Panel A				Panel A
NE	0.08148	1.20	0.230	PL	0.08415	1.25	0.212
NI	0.96989	3.18	0.001	RL	0.97707	3.21	0.001
MUNIF×MCOMP	0.62235	0.73	0.463
Constant	12.31455	11.05	0.000	Constant	12.03689	12.07	0.000
Panel B				Panel B
R² within	0.0428	Wald chi²	18.86	R² within	0.0419	Wald chi²	16.67
R² between	0.0928	Prob > chi²	0.0003	R² between	0.0905	Prob > chi²	0.0002
R² overall	0.1002	N	617	R² overall	0.1003	N	617

$P_{i t} = α_{0} + {β_{1} N E}_{i t} + {β_{2} N I}_{i t} + {β_{3} M C O M P}_{i t} {+ ε}_{i t}$ (equation 11)				$P_{i t} = α_{0} + {β_{1} N E}_{i t} + {β_{2} N I}_{i t} + ε_{i t}$ (equation 8)
Variable	Coefficient	Z statistic	p-value	Variable	Coefficient	Z statistic	p-value
Painel A				Panel A
NE	0.08727	1.22	0.222	PL	0.09645	1.35	0.177
NI	0.88034	3.17	0.002	RL	0.88431	3.11	0.002
MCOMP	0.28413	1.96	0.050
Constant	13.22318	10.61	0.000	Constant	12.14684	11.55	0.000
Painel B				Panel B
R² within	0.0499	Wald chi²	22.59	R² within	0.0364	Wald chi²	16.06
R² between	0.0646	Prob > chi²	0.0000	R² between	0.0818	Prob > chi²	0.0003
R² overall	0.0787	N	605	R² overall	0.0922	N	605

Universidade de São Paulo, Faculdade de Economia, Administração e Contabilidade, Departamento de Contabilidade e Atuária Av. Prof. Luciano Gualberto, 908 - prédio 3 - sala 118, 05508 - 010 São Paulo - SP - Brasil, Tel.: (55 11) 2648-6320, Tel.: (55 11) 2648-6321, Fax: (55 11) 3813-0120 - São Paulo - SP - Brazil
E-mail: recont@usp.br

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Uniformity and comparability: an analysis of the relevance for the Brazilian capital market* * The authors are grateful to the Coordination for the Improvement of Higher Education Personnel (Capes) for its financial support in carrying out this research.

ABSTRACT

Uniformity and comparability: an analysis of the relevance for the Brazilian capital market^* * The authors are grateful to the Coordination for the Improvement of Higher Education Personnel (Capes) for its financial support in carrying out this research.