Ordinary Voluntary Accounting Changes due to a Business Combination: A Case Study / Alterações contábeis voluntárias comuns devido a uma combinação de negócios: um estudo de caso

Adolfo Henrique Coutinho e Silva, Moacir Sancovschi, Cínthia Ferreira Amaral


This study analyzes the voluntary accounting changes due to a business combination in a critical case study of an unregulated public company after the IFRS adoption in Brazil. This research consists of the study of a single case. The qualitative analysis was based on the Positive Accounting Theory to show that in the company analyzed, there were no internal or external incentives for earnings management, and that the voluntary accounting changes were motivated by the concern of accountants and managers to report the results in a more appropriate way. The findings suggest that there is no evidence that the analyzed companies made any opportunistic accounting choices due to mergers and acquisitions, as is often suggested by the accounting literature on earnings management. Quite the contrary, the accounting choices observed may have been simply the result of the managers’ and accountants’ good intentions, even though there is no way to prove that they were efficient. This critical case study brings back an important part of the accounting literature which values the efforts of accounting professionals in judging how adequately accounting standards are applied in emerging economies. The paper presents evidence that the accounting changes made by these companies are not necessarily explained by opportunistic factors, and eventually can contribute to increase company value, especially in an emerging economy context in which there is a significant degree of shareholder concentration.


Accounting Changes, Earnings Management, Business Combinations, Mergers and Acquisitions, emerging economies.

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