VALUE RELEVANCE: ANALYSIS OF THE EFFECTS OF EVALUATION FAIR VALUE

Abstract

Convergence to the International Standards, with Law nº 11.638 / 07 and the full adoption of Accounting Pronouncements (CPCs) substantially changed the accounting practice in Brazil, especially the measurement of intangible assets. In this context, the present study investigates the effects of the use of fair value measurement of equity elements of the relevance of accounting information in Brazilian companies listed on the BM&FBovespa from 2003 to 2012, hypothesizing that the fair value makes valuation of equity closer to the market value of the company, therefore more relevant. For this, we use the model of value relevance, which adopts the annual information of stock price as the dependent variable and earnings per share (EPS) and equity per share (PLA) as independent variables. The main results show that after initial and full adoption of CPCs, the use of fair value to valuation of assets and liabilities, shareholders' equity has not become more relevant, rejecting the two research hypotheses. These results can be explained by the subjectivity of fair value against tradition and objectivity of historical cost.