A standard correlations among performance indices based on Brazil, US and IFRS accounting standards of Brazilian and United Kingdom companies

Abstract

The aim of the article is to identify canonical correlations among performance indicators calculated from a
base of accounting statements prepared in accordance with United States Generally Accepted Accounting
Principles (US GAAP), Brazilian accounting standards (BR GAAP) and International Financial Reporting
Standards (IFRS). Descriptive research with a quantitative approach was carried out. A research sample of
50 companies was selected, including 17 Brazilian companies listed on the Bovespa’s Board of Corporate
Governance and 33 English companies listed on the London Stock Exchange, all of which trade American
Depositary Receipts on the New York Stock Exchange. The results demonstrate divergence between
companies and indicators in relation to differences calculated in performance indicators as well as
statistically significant canonical correlations in both groups researched. The performance indicators of
Brazilian and English companies were not affected in any significant way, despite divergences between BR
GAAP and US GAAP and between IFRS and US GAAP. However, stands out as the main limitation that no
company listed on Bovespa was found in the lists of European stock exchanges, which was necessary in
order to verify the differences in these companies’ indicators in the conversion of their accounting
statements from BR GAAP to US GAAP and IFRS. This required the adoption of an alternative (i.e.,
canonical correlations). The main implication of this study is that the impact of IFRS adoption by Brazilian
companies may be less than the expected, in terms of improvement of accounting quality and cost of
adoption. The article advances research on a comparative study of the financial disclosures made
according to Brazilian, American and international accounting standards, supported by an analysis of
performance indicators calculated from accounting statements prepared from and based on these
standards.