The impact of corporate governance on the information content of earnings and cash flows: Evidence from Brazil

We use the unique capital market structure that Brazil established in 2000 to investigate how different governance listing segments impact the relative and incremental information content of earnings and cash flows. Brazilian firms are classified into different listing segments on the stock market depending of their voluntary compliance with corporate governance regulations. We find that earnings provide greater relative information in the market as a whole, and this result is driven by the segments with enhanced governance regulations. For the market as a whole and for the enhanced governance segments, both earnings and cash flows provide incremental information.