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José Elias Feres de Almeida ORCID logo, Gerlando Augusto Sampaio Franco de Lima ORCID logo, Iran Siqueira Lima


The value relevance of accounting information has been tested in many studies, however, there are little evidence from Brazil about the content information in earnings and the improvement of its relevance according to adoption of better corporate governance practices and the cross listing on the NYSE. This study aims to verify the impact of earnings interactively with corporate governance levels of BOVESPA and ADR listing on the NYSE on firms’ market value measured by market-to-book ratio. Our sample is composed by 231 public companies’ listed and unlisted on special segments of governance at BOVESPA and on the NYSE from 2000 up to 2006, totalizing 1.253 observations. Methodologically, we present results of different estimation procedures such as Pooled Ordinary Least Squares (POLS) and panel data with Random Effects (RE) and Fixed Effects (FE) following Breusch-Pagan and Hausman Tests to indicate the best estimators. The results indicate that: i) BOVESPA’s corporate governance levels improve the content information of accounting earnings reported and enhance the coefficients; ii) earnings of firms’ which trade ADR on the NYSE are not relevant but, have positive coefficients and; iii) the content information in earnings of firms listed on Level 2 and level New Market are more relevant from firms on Level 1 or unlisted. This paper contributes with the discussion about accounting information relevance to the market, investors, regulators and practitioners, as well as, the role of corporate governance to improve information quality.

Keywords: Earnings, Corporate Governance, ADR, Market to Book Ratio, Accounting

How to cite this paper: de Almeida, J. E. F., de Lima, G. A. S. F. & Lima, S. (2009). Corporate governance and ADR effects on earnings quality in the Brazilian capital markets. Corporate Ownership & Control, 7(1), 55-62.