IMPACT OF ADOPTING THE “FAIR DOLLAR” IN DIFFERENT SCENARIOS OF EXCHANGE VOLATILITY: ANALYSIS OF ECONOMIC AND FINANCIAL MEASURES OF BRAZILIAN COMPANIES DEALING IN ADRs

Abstract

The debate about inconsistencies in the current standard of translation of accounting statements has intensified, especially concerning the level of reliable representation that such practice offers to the accounting pieces. The present study focuses on the alternative proposal conceived by Szuster and Szuster (2003), aiming at analyzing, in different scenarios of exchange volatility of the American dollar, the impact of the “fair dollar” application on the economic and financial indicators of Brazilian companies that deal in American Depositary Receipts. Thus, regarding the methodological procedures, this research is classified as quantitative, descriptive, and documental. Performance indicators were elaborated for each of the 18 companies sampled under the perspective of the ‘real dollar’ (divulged in such reports) and the ‘fair dollar’ (calculated according to the parameters exposed by the authors of the proposal), based mainly on the divulged Forms 20-F. The results obtained concerning the economic and financial indicators suggest conclusions that range from an overvalued disclosure of the business volume and profit generation per invested capital to undervalued fixed assets, masking a possible negative Net Working Capital. Thus, the discrepancy between the foreign currency modalities, which faced unevenness of up to 12%, is significantly reflected on the economic and financial indicators, accentuated in 2015. Therefore, the theory of the ‘fair dollar’ proved itself well-founded since potentially distorted information is generated when accounting statements based on the ‘real dollar’ are translated, which compromises the usefulness of the reported information when stakeholders make decisions.