Corporate Governance and earnings management in brazilian financial institutions

Authors

DOI:

https://doi.org/10.5902/1983465972196

Keywords:

Corporate governance, Earnings management, Accruals, Financial institution

Abstract

Purpose: This study aimed to verify how corporate governance measures relate to earnings management in Brazilian publicly traded financial institutions.

Design/methodology/approach: To carry out the research, 20 financial institutions listed on B3 were analyzed, with annual data from 2010 to 2019 obtained from the websites of the Brazilian Securities and Exchange Commission (CVM) and the IF.Data of the Central Bank of Brazil (Bacen). To obtain the results, regression models were estimated for each attribute of corporate governance in comparison with the selected earnings management measure.

Findings: The results point to several associations of corporate governance attributes with earnings management measures. That is, corporate governance attributes reduce/increase earnings management in financial entities.

Research limitations/implications: The findings of this study aim to assist company managers in improving their corporate governance policies to reduce accounting choices related to accounting management.

Originality/value: The study proves to be original by the use of a broad panorama referring to corporate governance measures. Generally, studies that analyze the effects of governance on earnings management use few measures for this attribute. The study also advances by specifically analyzing financial institutions, generally excluded from studies on information quality due to their particularities.

Downloads

Download data is not yet available.

Author Biographies

Paulo Vitor Souza de Souza, Federal University of Para

 Doctor of Accounting from University of Brasília (UnB); Professor of Accounting at Federal University of Pará (UFPA).

Ana Gabriela de Souza Araújo, Federal University of Para

Bachelor of Accounting from Federal University of Pará (UFPA).

Raquel Bandeira Neves, Federal University of Para

Bachelor of Accounting from Federal University of Pará (UFPA).

References

Ahmed, S. (2013). Measuring quality of reported earnings’ response to corporate governance reforms in Russia. Journal of Accounting in Emerging Economies, 3(1), 21-46. https://doi.org/10.1108/20440831311287682 DOI: https://doi.org/10.1108/20440831311287682

Ali, A., & Zhang, W. (2015). CEO tenure and earnings management. Journal of Accounting and Economics, 59(1), 60-79. https://doi.org/10.1016/j.jacceco.2014.11.004 DOI: https://doi.org/10.1016/j.jacceco.2014.11.004

Al-Najjar, B. (2010). Corporate governance and institutional ownership: evidence from Jordan. Corporate Governance, 10(2), 176-190. https://doi.org/10.1108/14720701011035693 DOI: https://doi.org/10.1108/14720701011035693

Azevedo, M., & Gartner, I. (2020). Concentration and Competition in Domestic Credit Market. Revista de Administração Contemporânea, 24(5), 380-399. https://doi.org/10.1590/1982-7849rac2020190347 DOI: https://doi.org/10.1590/1982-7849rac2020190347

Baldez, B. H. F. (2015). Gerenciamento de resultados e estrutura de propriedade e controle: evidências empíricas das empresas brasileiras de capital aberto, (Master Dissertation), Federal University of Santa Catarina – UFSC, Florianópolis, SC, Brazil, avaiable at: https://repositorio.ufsc.br/handle/123456789/159430

Ball, P. (2022). Economists win Nobel prize for showing why banks fail. Nature, 10 October, 1-10. https://doi.org/10.1038/d41586-022-03235-0 DOI: https://doi.org/10.1038/d41586-022-03235-0

Bendickson, J., Muldoon, J., Liguori, E., & Davis, P. E. (2016). Agency theory: the times, they are a-changin. Management Decision, 54(1), 174-193. https://doi.org/10.1108/MD-02-2015-0058 DOI: https://doi.org/10.1108/MD-02-2015-0058

Cornett, M. M., McNutt, J. J., & Tehranian, H. (2009). Corporate governance and earnings management at large US bank holding companies. Journal of Corporate Finance, 15(4), 412-430. https://doi.org/10.1016/j.jcorpfin.2009.04.003 DOI: https://doi.org/10.1016/j.jcorpfin.2009.04.003

Cunha, P. R., Vogt, M., & Degenhart, L. (2016). Governança corporativa e remuneração dos diretores executivos das empresas Brasileiras. Enfoque: Reflexão Contábil, 35(2), 1-16. https://doi.org/10.4025/enfoque.v35i2.30924 DOI: https://doi.org/10.4025/enfoque.v35i2.30924

Dal Magro, C. B., Dani, A. C., & Klann, R. C. (2019). Remuneração variável no tempo de mandato é a causa do oportunismo dos CEOs? Evidências do gerenciamento de resultados no Brasil. Enfoque: Reflexão Contábil, 38(3), 77-92. https://doi.org/10.4025/enfoque.v38i3.42193 DOI: https://doi.org/10.4025/enfoque.v38i3.42193

Dantas, J. A., Galdi, F. C., Capelletto, L. R., & Medeiros, O. R. (2013). Discricionariedade na mensuração de derivativos como mecanismo de gerenciamento de resultados em bancos. Brazilian Review of Finance, 11(1), 17-48. https://doi.org/10.12660/rbfin.v11n1.2013.3658 DOI: https://doi.org/10.12660/rbfin.v11n1.2013.3658

Dechow, P. M., Sloan, R. G., & Sweeney, A. P. (1995). Causes and Consequences of Earnings Manipulation: An Analysis of Firms Subject to Enforcement Actions by the SEC. Contemporary Accounting Research, 13(1), 1-36. https://doi.org/10.1111/j.1911-3846.1996.tb00489.x DOI: https://doi.org/10.1111/j.1911-3846.1996.tb00489.x

DeFond, M. L., Hann, R. N., & Hu, X. (2005). Does the market value financial expertise on audit committees of boards of directors?. Journal of Accounting Research, 43(2), 153-193. https://doi.org/10.1111/j.1475-679x.2005.00166.x DOI: https://doi.org/10.1111/j.1475-679x.2005.00166.x

Elnahass, M., Izzeldin, M., & Steele, G. (2018). Capital and earnings management: evidence from alternative banking business models. The International Journal of Accounting, 53(1), 20-32. https://doi.org/10.1016/j.intacc.2018.02.002 DOI: https://doi.org/10.1016/j.intacc.2018.02.002

Hermalin, B. E., & Weisbach, M. S. (1988). The determinants of board composition. The RAND Journal of Economics, 589-606. https://doi.org/10.2307/2555459 DOI: https://doi.org/10.2307/2555459

Instituto Brasileiro de Governança Corporativa [IBGC]. (2015). Código das melhores práticas de governança corporativa. 5.ed. / Instituto Brasileiro de Governança Corporativa. - São Paulo, SP: IBGC.

Kent, P., Routledge, J., & Stewart, J. (2010). Innate and discretionary accruals quality and corporate governance. Accounting & Finance, 50(1), 171-195. https://doi.org/10.1111/j.1467-629X.2009.00321.x DOI: https://doi.org/10.1111/j.1467-629X.2009.00321.x

Lassoued, N. (2022). Capital structure and earnings quality in microfinance institutions. International Journal of Managerial Finance, 18(2), 240-260. https://doi.org/10.1108/IJMF-08-2020-0454 DOI: https://doi.org/10.1108/IJMF-08-2020-0454

Mak, Y. T., & Li, Y. (2001). Determinants of corporate ownership and board structure: evidence from Singapore. Journal of Corporate Finance, 7(3), 235-256. https://doi.org/10.1016/S0929-1199(01)00021-9 DOI: https://doi.org/10.1016/S0929-1199(01)00021-9

Martinez, A. L. (2010). Quando o conselho de administração e a auditoria evitam o gerenciamento de resultados? Evidências empíricas para empresas brasileiras. Revista de Informação Contábil, 4(1), 76-93. https://doi.org/10.34629/ric.v4i1.76-93

Matuszak, Ł., Różańska, E., & Macuda, M. (2019). The impact of corporate governance characteristics on banks’ corporate social responsibility disclosure: Evidence from Poland. Journal of Accounting in Emerging Economies, 9(1), 75-102. https://doi.org/10.1108/JAEE-04-2017-0040 DOI: https://doi.org/10.1108/JAEE-04-2017-0040

Nazaré, S. R. M. (2020). Análise dos fatores que contribuem para o uso das provisões de créditos como instrumento de gerenciamento de resultados em bancos no Brasil. (PhD Thesis). University of Brasilia – UnB, Federal District, DF, Brazil, available at: https://repositorio.unb.br/handle/10482/39008

Nizaeva, M., & Uyar, A. (2017). Corporate governance codes of Eurasian Economic Union countries: a comparative investigation. Corporate Governance, 17(4), 748-769. https://doi.org/10.1108/CG-11-2016-0214 DOI: https://doi.org/10.1108/CG-11-2016-0214

Panucci-Filho, L., & Carmona, L. J. (2016). Evidências de Gerenciamento de Resultados nos Sistemas de Recompensas de Executivos: Um Estudo em Empresas com Níveis Diferenciados de Governança Corporativa. Revista de Contabilidade da UFBA, 10(3), 154-176. https://doi.org/10.9771/rc-ufba.v10i3.18150 DOI: https://doi.org/10.9771/rc-ufba.v10i3.18150

Paulo, E., Cavalcante, P. R. N., & Melo, I. I. S. L. (2012). Qualidade das informações contábeis na oferta pública de ações e debêntures pelas companhias abertas brasileiras. Brazilian Business Review, 9(1), 1-26. http://dx.doi.org/10.15728/bbr.2012.9.1.1 DOI: https://doi.org/10.15728/bbr.2012.9.1.1

Piccoli, P. G. R., Souza, A., & da Silva, W. V. (2014). As práticas de governança corporativa diminuem o gerenciamento de resultados? Evidências a partir da aversão na divulgação de prejuízos e de queda nos lucros. Revista Contemporânea de Contabilidade, 11(22), 141-162. https://doi.org/10.5007/2175-8069.2014v11n22p141 DOI: https://doi.org/10.5007/2175-8069.2014v11n22p141

Ramos, G. M., & Martinez, A. L. (2006). Governança corporativa. Revista Contemporânea de Contabilidade, 3(6), 143-164. https://doi.org/10.5007/%25x

Salem, R. I. A., Ezeani, E., Gerged, A. M., Usman, M., & Alqatamin, R. M. (2021). Does the quality of voluntary disclosure constrain earnings management in emerging economies? Evidence from Middle Eastern and North African banks. International Journal of Accounting & Information Management, 29(1), 91-126. https://doi.org/10.1108/IJAIM-07-2020-0109 DOI: https://doi.org/10.1108/IJAIM-07-2020-0109

Schipper, K. (1989). Commentary on earnings management. The Accounting Horizons, 3(4), 91-102.

Silva, A. L. C., & Leal, R. P. C. (2005). Índice de governança corporativa, desempenho e valor da firma no Brasil. Brazilian Review of Finance, 3(1), 1-18. https://doi.org/10.12660/rbfin.v3n1.2005.1143 DOI: https://doi.org/10.12660/rbfin.v3n1.2005.1143

Silva, C. A. M. (2016). Utilização da provisão para créditos de liquidação duvidosa para fins de gerenciamento de resultado nas instituições financeiras brasileiras e luso-espanholas. (Master’s thesis). University of Brasilia, Federal University of Paraiba and Federal University of Rio Grande do Norte, Brasília, João Pessoa and Natal, DF, PB and RN, Brazil, available at: https://repositorio.unb.br/bitstream/10482/20339/1/2016_CarlosAlbertoMartinsSilva.pdf

Silva, S. N. A. (2017). Estrutura dos Conselhos de Administração e Gerenciamento de Resultados: Um Estudo em Empresas Brasileiras Listadas na BM&FBOVESPA. XVII USP International Conference in Accounting, 29-July, São Paulo, SP, Brazil, available at: https://congressousp.fipecafi.org/anais/17UspInternational/ArtigosDownload/286.pdf

Silva, P. Y. C., & Fonseca, M. W. (2015). Gerenciamento de resultados: estudo empírico em empresas brasileiras e portuguesas antes e após a adoção das IFRS. Revista Base (Administração e Contabilidade) da UNISINOS, 12(3), 193-209. DOI: https://doi.org/10.4013/base.2015.123.03

Sousa, L. O., & Bressan, V. G. F. (2018). Gerenciamento de Resultados em Bancos: Indícios relacionados à aversão a divulgação de prejuízos. Revista Evidenciação Contábil & Finanças, 6(1), 83-100. DOI: https://doi.org/10.18405/recfin20180105

Souza, P. V. S., & Silva, C. A. T. (2020). Effects of COVID-19 pandemic on international capital markets. International Journal of Economics and Financial Issues, 10(6), 163. https://doi.org/10.32479/ijefi.10702 DOI: https://doi.org/10.32479/ijefi.10702

Thomas, W. B., Herrmann, D. R., & Inoue, T. (2004). Earnings management through affiliated transactions. Journal of International Accounting Research, 3(2), 1-25. https://doi.org/10.2308/jiar.2004.3.2.1 DOI: https://doi.org/10.2308/jiar.2004.3.2.1

Trapp, A. C. G. (2009). A relação do conselho fiscal como componente de controle no gerenciamento de resultados contábeis. (PhD Thesis). University of São Paulo (USP), São Paulo, SP, Brasil. https://doi.org/10.11606/T.12.2009.tde-08072009-160920 DOI: https://doi.org/10.11606/T.12.2009.tde-08072009-160920

Zhang, D. & Cang, Y. (2021). Ownership concentration, foreign ownership and auditing: evidence from SMEs in Latin America. Pacific Accounting Review, 33(3), 301-321. https://doi.org/10.1108/PAR-06-2020-0081 DOI: https://doi.org/10.1108/PAR-06-2020-0081

Downloads

Published

2023-06-30

How to Cite

Souza, P. V. S. de, Araújo, A. G. de S., & Neves, R. B. (2023). Corporate Governance and earnings management in brazilian financial institutions. Revista De Administração Da UFSM, 16(2), e3. https://doi.org/10.5902/1983465972196

Issue

Section

Articles