Earnings management and economic crises in the Brazilian capital market/ Gerenciamento de resultados e crises economicas no mercado de capitais brasileiro/ Gestion de resultados y crisis economica en lo mercado de capitales brasileno

• Published in: Revista de administração de emprêsas 2014-05, Vol.54 (3), p.268
• Main Authors: Da Silva, Aldy Fernandes, Weffort, Elionor Farah Jreige, Flores, Eduardo Da Silva, Da Silva, Glauco Peres
• Format: Article
• Language: Portuguese
• Subjects: Capital markets; Financial crises; Foreign investments
• ISSN: 0034-7590
• DOI: 10.1590/S0034-759020140303

The 2008 economic crisis challenged accounting, either demanding recognition and measurement criteria well adjusted to this scenario or even questioning its ability to inform appropriately entities' financial situation before the crisis occurred. So, our purpose was to verify if during economic crises listed companies in the Brazilian capital market tended to adopt earnings management (EM) practices. Our sample consisted in 3,772 firm-years observations, in 13 years--1997 to 2009. We developed regression models considering discretionary accruals as EM proxy (dependent variable), crisis as a macroeconomic factor (dummy variable of interest), ROA, market-to-book, size, leverage, foreign direct investment (FDI) and sector as control variables. Different for previous EM studies two approaches were used in data panel regression models and multiple crises were observed simultaneously. Statistics tests revealed a significant relation between economic crisis and EM practices concerning listed companies in Brazil in both approaches used.