Impact of the recognition of financial instruments measured at fair value on net income volatility

Abstract

In order to verify if the recognition of financial instruments measured at fair value through profit or loss leading to a greater volatility of accounting net incomes, this research adopted statistical tests that analyze the difference between as variances of net incomes that consider financial instruments at fair value and historical cost amortized, in the period between 2010 and 2016, of the Brazilian non-financial companies and banks with a greater Presence in Stock Market. After analyzing the effect of unrealized gains and losses on net income, there is a tendency for income smoothing, both for non-financial companies and for banks, there isn't for increased volatility as argued by critics for the adoption of fair value. This trend may have a positive impact on the valuation of companies by the capital market and by creditors, they have already showed a preference for consistent profits over time due to its risk aversion.

Keywords

• Valor justo
• Volatilidade
• Suavização
• Instrumentos financeiros