Debt Issues and Earnings Management

Abstract

The aim of this paper is to analyze earnings management (EM) surrounding debenture issues of companies listed on the BM&FBOVESPA. EM is an intentional intervention in external financial reports in order to obtain some private gain. This practice is especially important at the time of issuing debentures because if earnings are inflated, investors may pay an artificially high price. To measure earnings management, current discretionary accruals were used as a proxy, based on the Modified Jones and Modified Jones with ROA econometric models. All of the regressions considered the fixed effects of the companies and the time series effects of the analyses. Evidence was found that companies inflate their financial results in the issuing period in order to positively influence their investors. The results suggest that there is EM in the quarter preceding the issue (t = -1), indicating the influence that investors may have been under when making the decision to invest in debentures from these companies. In addition, it was verified that companies with higher debt, profitability, and sales growth ratios have higher levels of earnings management. The reputation of the auditor was not statistically significant regarding reductions in the level of management. The results also show that companies listed on Level II and New Market had higher levels of management when considering the Modified Jones with ROA model. Therefore, it can be concluded that there is a greater level of earnings management in companies that issue debentures in the period preceding the event. Finally, the variable that is directly related to the level of earnings management is sales growth.

Investor Sentiment and Earnings Management: Does Analysts’ Monitoring Matter?

“…Therefore, managers must consider the moment and the firm's situation as they manage earnings since earnings are eventually priced by the market (Sloan, 1996). Several are the incentives for management: managers' pay (Ali & Zhang, 2015;Dechow & Sloan, 1991;Jensen & Meckling, 1976), covenants (Dichev & Skinner, 2002;Fields et al, 2001;Nardi & Nakao, 2009;Sincerre, Sampaio, Famá, & Santos, 2016), regulatory issues (Huang, Lao, & McPhee, 2017;Rezende & Nakao, 2012), market expectations and valuation (Abarbanell & Lehavy, 2003;Almeida, Lopes, & Corrar, 2011;Buchner et al, 2017;Martinez, 2011;Mota et al, 2017), which are the object of analysis for empirical researches.…”

A remuneração dos executivos mitiga os accruals discricionários? Uma análise em bancos brasileiros de capital aberto

“…Com isso, as empresas que gerenciam em maior ou em menor magnitude não são sensíveis ao crescimento ou diminuição da receita entre os períodos. Resultado que diverge da literatura, como apontado por Hochberg (2012) e Sincerre et al (2016). De outra forma, a rentabilidade do ativo não apresentou relação com os accruals discricionários (exceto no quantil 0,75, ao nível de 10%).…”

“…De outra forma, a rentabilidade do ativo não apresentou relação com os accruals discricionários (exceto no quantil 0,75, ao nível de 10%). Desse modo, entende-se que a rentabilidade dos ativos não tem reflexo no nível de gerenciamento de resultados dos bancos brasileiros, o que está em contraponto com as evidências de Dechow et al (1995), Sincerre et al (2016), Consoni, Colauto e Lima (2017.…”

Gerenciamento de Resultados em Bancos: Indícios relacionados à aversão a divulgação de prejuízos

“…A figura do lucro/prejuízo acaba servindo como parâmetro para avaliar a instituição (Burgstahler & Dichev, 1997). Caso esse resultado tenha sido gerenciado e os usuários não sejam capazes de identificar o efeito desse gerenciamento, sua interpretação sobre o desempenho da entidade pode ser equivocada (Sincerre, Sampaio, Famá & Santos, 2016). Logo, é importante que investidores e clientes saibam reconhecer se existem indícios de gerenciamento de resultado para evitar divulgar prejuízos no setor bancário.…”