Business Management Dynamics

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ISSN: 2047-7031

bmd Business and Management Dynamics bmd
ISSN: 2047-7031  
Volume  3   Issue 5  2013  
Article Abstract
The informativeness of taxable income and book income before and after the adoption of IFRS in Brazil
Keywords:  Tax Income, Book Income, Adoption of IFRS
Antonio Lopo Martinez and Leonardo Bittencourt Ronconi
This article analyzes the information content of taxable income in relation to book income in Brazil before and after the Transition Tax Regime (RTT), which was established as of calendar year 2010 to neutralize the tax effects of convergence of the country's accounting standards to IFRS. We define informativeness as the ability to cause changes in stock prices. Our sample is composed of firms listed on the BM&FBovespa between 2005 and 2011. The results indicate greater informativeness of taxable income in relation to book income in the sample as a whole. Despite the advent of the RTT and the process of convergence to international accounting standards, the informative content of taxable income continued being more significant than book income after this advent, although the relative difference fell.
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