Influence of committees on earnings management

Authors

DOI:

https://doi.org/10.16930/2237-766220223269

Keywords:

Earnings Management, Trade-Off, Audit Committee, Board of Auditors

Abstract

The objective of this article was to verify whether the presence of the Audit Committee and the Board of Auditors encourages a migration from accrual-based earnings management to the management of real activities. The methodology used for the study development was empirical, quantitative and descriptive research. The data comprise Brazilian companies listed on B3 in the period from 2010 to 2017. The models were estimated by the ordinary least squares method - OLS - with panel data, controlled by year dummy and ADR. There is no evidence to indicate the presence of a trade-off. When there are audit committees and Board of Auditors, there is a decrease in both types of earnings management.

References

Badertscher, B. A. (2011). Overvaluation and the choice of alternative earnings management mechanisms. The Accounting Review, 86(5), 1491-1518. DOI: https://doi.org/10.2308/accr-10092

Badolato, P. G., Donelson, D. C., & Ege, M. (2014). Audit committee financial expertise and earnings management: The role of status. Journal of Accounting and Economics, 58, 208-230. DOI: https://doi.org/10.1016/j.jacceco.2014.08.006

Baioco, V. G., & Almeida, J. E. F. (2017) Efeitos do comitê de auditoria e do conselho fiscal na qualidade da informação contábil no Brasil. Revista de Contabilidade Financeira – USP, 28(74), 229-248. DOI: https://doi.org/10.1590/1808-057x201703250

Cohen, D. A., & Zarowin, P. (2010). Accrual-based and Real Earnings Management Activities around Seasoned Equity Offerings. Journal of Accounting and Economics, 50(1), 2-19. DOI: https://doi.org/10.1016/j.jacceco.2010.01.002

Comissão de Valores Mobiliários (2017). Instrução CVM 480. Recuperado em 23 agosto, 2017, de http://www.cvm.gov.br/legislacao/instrucoes/inst480.html

Commerford, B. P., Hatfield, R. C., & Houston, R. W. (2018). The Effect of Real Earnings Management on Auditor Scrutiny of Management’s Other Financial Reporting Decisions. The Accounting Review, 93(5), 145-163. DOI: https://doi.org/10.2308/accr-52032

Dechow, P. M., & Dichev, I. D. (2002). The Quality of Accruals and Earnings: The e Role of Accrual Estimation Errors. The Accounting Review, 77, 35-59. DOI: https://doi.org/10.2308/accr.2002.77.s-1.35

Dechow, P. M., Sloan, R. G., & Sweeney, A. P. (1996). Causes and Consequences of Earnings Manipulation: An Analysis of Firms Subject to Enforcement Actions by the SEC. Contemporary Accounting Researc, 13(1), 1-36. DOI: https://doi.org/10.1111/j.1911-3846.1996.tb00489.x

Feng, M., Li, C., & McVay, S. (2009). Internal control and management guidance. Journal of Accounting and Economics, 48, 190-209. DOI: https://doi.org/10.1016/j.jacceco.2009.09.004

Ghafran, C., & O’Sullivan, N. (2013). The Governance Role of Audit Committees: Reviewing a Decade of Evidence. International Journal of Management Reviews, 15, 381-407. DOI: https://doi.org/10.1111/j.1468-2370.2012.00347.x

Gunny, K. (2010). The relation between earnings management using real activities manipulation and future performance: Evidence from meeting earnings benchmarks. Contemporary Accounting Research, 27(3), 855-888. DOI: https://doi.org/10.1111/j.1911-3846.2010.01029.x

Healy, P. M., & Wahlen, J. M. (1999). A review of the earnings management literature and its implications for standard setting. Accounting Horizons, 13(4), 365-383. DOI: https://doi.org/10.2308/acch.1999.13.4.365

Huang, K., Lao, B., & McPhee, G. (2017). Does Stock Liquidity Affect Accrual-based Earnings Management? Journal of Business Finance & Accounting, 44, 417-447. DOI: https://doi.org/10.1111/jbfa.12236

Instituto Brasileiro de Governança Corporativa (2017). CMPGPT. Recuperado em 22 agosto, 2017, de http://www.ibgc.org.br/index.php/publicacoes/codigo-das-melhores-praticas.

Klein, A. (2002). Audit committee, board of director characteristics, and earnings management. Journal of accounting and economics, 33(3), 375-400. DOI: https://doi.org/10.1016/S0165-4101(02)00059-9

Maia, M. S., Silva, M. R. da., Dueñas, R., Almeida, P. P. de., Marcondes, S., & Ching, H. Y. (2005) Contribuição do sistema de controle interno para a excelência corporativa. Revista Universo Contábil, 1(1), 54-70.

Martinez, A. L. (2013). Earnings management in Brazil: a survey of the literature. Brazilian Business Review, 10(4), 1-29. DOI: https://doi.org/10.15728/bbr.2013.10.4.1

Mendonça, M. M. de, Costa, F. M. da, Galdi, F. C., & Funchal, B. (2010). O impacto da Lei Sarbanes-Oxley (SOX) na qualidade do lucro das empresas brasileiras que emitiram ADRs. Revista Contabilidade & Finanças, 21(52). DOI: https://doi.org/10.1590/S1519-70772010000100004

NBC TI 01 (2017). Recuperado em 14 agosto, 2021, de http://www1.cfc.org.br/sisweb/SRE/docs/RES_986.pdf

Pereira, A. C., & Nascimento, W. S. do. (2005) Um estudo sobre a atuação da Auditoria Interna na detecção de fraudes nas empresas do setor privado no Estado de São Paulo. Revista Brasileira de Gestão de Negócios, 19.

Pinho, R. M. de, & Costa, F. M. da. (2008, setembro). Qualidade de Accruals e Persistência dos Lucros em Firmas Brasileiras Listadas na Bovespa. Anais do Encontro Nacional da Associação Nacional de Pós-Graduação e Pesquisa em Administração, Rio de Janeiro, RJ, Brasil, 32. Recuperado em 13 agosto, 2017, de http://www.fucape.br/_public/producao_cientifica/2/Rafaela%20Modolo%20-%20Qualidade.pdf

Rodrigues, R. M. R. C., Melo, C. L. L. de, & Paulo, E. (2019). Earnings Management and Quarterly Discretionary Accruals Level in the Brazilian Stock Market. Brazilian Business Review, 16(3), 297-314. DOI: https://doi.org/10.15728/bbr.2019.16.3.6

Rodrigues, R. M. R. C., Paulo, E., & Melo, C. L. L. de. (2017). Gerenciamento de Resultados por Decisões Operacionais para Sustentar Desempenho nas Empresas Não-Financeiras do Ibovespa. Revista Contabilidade Vista & Revista, 28(3), 82-102.

Santos, L. S. R. dos, & Costa, F. M. da. (2008). Conservadorismo contábil e timeliness: evidências empíricas nas demonstrações contábeis de empresas Brasileiras com ADRs negociados na bolsa de Nova Iorque. Revista Contabilidade & Finanças, 19(48), 27-36. DOI: https://doi.org/10.1590/S1519-70772008000300003

Sawicki, J., & Shrestha, K. (2014). Misvaluation and Insider Trading Incentives for Accrual-based and Real Earnings Management. Journal of Business Finance & Accounting, 41, 926-949. DOI: https://doi.org/10.1111/jbfa.12084

Silva, W. A. C., Rocha, A. M., & Melo, A. A. O. (2011). Sistema de Gerenciamento e Controle Interno: uma Análise dos Escritórios de Contabilidade de Belo Horizonte/MG e Região Metropolitana a partir da Taxonomia de Kaplan e Cooper. Revista de Contabilidade e Organizações, 5(11), 125-144. DOI: https://doi.org/10.11606/rco.v5i11.34789

Silvestre, A. O., Costa, C. M., & Kronbauer, C. A. (2018). Audit Rotation and Earnings Quality: An Analysis Using Discretionary Accruals. Brazilian Business Review, 15(5), 410-426. DOI: https://doi.org/10.15728/bbr.2018.15.5.1

Sohn, B. C. (2016). The effect of accounting comparability on the accrual-based and real earnings management. J. Account. PublicPolicy. DOI: https://doi.org/10.1016/j.jaccpubpol.2016.06.003

Zang, A. Y. (2012). Evidence on the Trade-off between Real Activities Manipulation and Accrual-Based Earnings Management. The Accounting Review, 87(2), 675-703. DOI: https://doi.org/10.2308/accr-10196

Published

2022-10-14

How to Cite

Palhares Felix, C., & Bezerra, F. A. . (2022). Influence of committees on earnings management. Revista Catarinense Da Ciência Contábil, 21, e3269. https://doi.org/10.16930/2237-766220223269

Issue

Section

Articles