LOSS RECOGNITION TIMELINESS IN BRAZILIAN BANKS: THE INFLUENCE OF STATE OWNERSHIP

摘要

This paper investigates the effect of state ownership on the conditional conservatism of financial reports of Brazilian banks. State controlled banks in Brazil face additional monitoring from government authorities and managers risk litigation as individuals with potential effects on their personal wealth. Thus we hypothesize that state ownership would have a positive marginal effect on conditional conservatism in this institutional environment. Using a times series conditional conservatism model our results confirm our expectations and show that state ownership has a positive effect on the conditional conservatism of earnings in Brazil. Using a logit model we also corroborate this effect after controlling for the effect of unconditional conservatism and earnings smoothing.