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Suma de Negocios
versión impresa ISSN 2215-910Xversión On-line ISSN 2027-5692
Resumen
SOUZA DE SOUZA, Paulo Vitor y BEZERRA MORAIS, Henrique Carvalho. Agency costs and conditional conservatism of public companies in the Brazilian electric industry. suma neg. [online]. 2024, vol.15, n.32, pp.17-28. Epub 11-Ago-2024. ISSN 2215-910X. https://doi.org/10.14349/sumneg/2024.v15.n32.a3.
Introduction / objective:
In organisations, conflicts of interest give rise to agency costs aimed at mitigating agent opportunism. High-quality accounting information reduces these conflicts by minimising information asymmetry. Consequently, this study aims to investigate the relationship between agency costs and conditional conservatism in Brazilian electric power industry companies listed on the B3.
Methodology:
Data from 21 Brazilian electric power industry companies for the period 2012 to 2020 were utilised. Twenty-four attributes associated with agency costs were analysed, and Ball and Shivakumar’s (2005) conditional conservatism model was employed as a measure of accounting information quality. Panel data regression models were used to obtain the results.
Results:
According to the central conditional conservatism model, companies tend to exhibit optimism rather than conservatism, anticipating gains instead of losses. Results, assessed across five dimensions, revealed that factors such as board composition, variable compensation, and agreements with shareholders reduce optimism, while qualified audits, longer tenures, and the presence of a permanent audit committee increase optimism. Therefore, attributes that influence optimism, accounting information neutrality, and consequently, financial reporting quality, are identified.
Conclusions:
This study benefits various users of accounting information. Investors can pinpoint governance policies that align interests, regulators can enhance oversight, and organisation members can adopt policies that encourage the alignment of interests between principals and agents.
Palabras clave : Agency costs; electric power industry; conditional conservatism; conditional optimism; neutrality; Brazil.