Earnings management and corporate governance: an analysis based on the adoption of IFRS in Brazil
Purpose: This paper aims to analyze whether the adoption of the International Financial Reporting Standards (IFRS) strengthened the negative relationship among earnings management and corporate governance best practices, which are: B3’s differentiated levels of corporate governance, the presence of...
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| Format: | Article |
| Language: | Portuguese |
| Published: |
Universidade Federal do Rio Grande do Norte
2021-07-01
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| Series: | Revista Ambiente Contábil |
| Subjects: | |
| Online Access: | https://periodicos.ufrn.br/ambiente/article/view/25718 |
| _version_ | 1828059394747662336 |
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| author | Bruno Chacon Prata Leonardo Flach |
| author_facet | Bruno Chacon Prata Leonardo Flach |
| author_sort | Bruno Chacon Prata |
| collection | DOAJ |
| description | Purpose: This paper aims to analyze whether the adoption of the International Financial Reporting Standards (IFRS) strengthened the negative relationship among earnings management and corporate governance best practices, which are: B3’s differentiated levels of corporate governance, the presence of a board of independent directors and whether the company is audited by a Big Four or not.
Methodology: We applied panel data regression with a sample of 92 companies listed in B3 during the period 2002-2007, for the period prior to IFRS and 2010-2015, for the period after IFRS. Data were collected from the explanatory notes, company reference form and in the Economatica® database. In order to measure the dependent variable earnings management, we applied the model proposed by Dechow, Hutton, Kim and Sloan (2012).
Results: Results show that when there is an independent administrative committee, the levels of earnings management are lower, and this relationship is driven by the IFRS adoption. We cannot affirm that companies at the highest levels of corporate governance and audited by a Big Four have a lower incidence of earnings management after the application of IFRS.
Contributions of the Study: This paper contributes to a better understanding of how variables related to governance can influence the quality of accounting and financial information. It also contributes to the literature that investigates how IFRS can influence the quality of accounting information. |
| first_indexed | 2024-04-10T21:42:20Z |
| format | Article |
| id | doaj.art-477cf3275f4545eb99210f52eb771301 |
| institution | Directory Open Access Journal |
| issn | 2176-9036 |
| language | Portuguese |
| last_indexed | 2024-04-10T21:42:20Z |
| publishDate | 2021-07-01 |
| publisher | Universidade Federal do Rio Grande do Norte |
| record_format | Article |
| series | Revista Ambiente Contábil |
| spelling | doaj.art-477cf3275f4545eb99210f52eb7713012023-01-18T21:13:28ZporUniversidade Federal do Rio Grande do NorteRevista Ambiente Contábil2176-90362021-07-0113210.21680/2176-9036.2021v13n2ID2571821214Earnings management and corporate governance: an analysis based on the adoption of IFRS in BrazilBruno Chacon Prata0https://orcid.org/0000-0003-3387-3142Leonardo Flach1https://orcid.org/0000-0002-4316-0704Federal University of Santa Catarina (UFSC). Federal University of Santa Catarina (UFSC).Purpose: This paper aims to analyze whether the adoption of the International Financial Reporting Standards (IFRS) strengthened the negative relationship among earnings management and corporate governance best practices, which are: B3’s differentiated levels of corporate governance, the presence of a board of independent directors and whether the company is audited by a Big Four or not. Methodology: We applied panel data regression with a sample of 92 companies listed in B3 during the period 2002-2007, for the period prior to IFRS and 2010-2015, for the period after IFRS. Data were collected from the explanatory notes, company reference form and in the Economatica® database. In order to measure the dependent variable earnings management, we applied the model proposed by Dechow, Hutton, Kim and Sloan (2012). Results: Results show that when there is an independent administrative committee, the levels of earnings management are lower, and this relationship is driven by the IFRS adoption. We cannot affirm that companies at the highest levels of corporate governance and audited by a Big Four have a lower incidence of earnings management after the application of IFRS. Contributions of the Study: This paper contributes to a better understanding of how variables related to governance can influence the quality of accounting and financial information. It also contributes to the literature that investigates how IFRS can influence the quality of accounting information.https://periodicos.ufrn.br/ambiente/article/view/25718earnings management; corporate governance; ifrs. |
| spellingShingle | Bruno Chacon Prata Leonardo Flach Earnings management and corporate governance: an analysis based on the adoption of IFRS in Brazil Revista Ambiente Contábil earnings management; corporate governance; ifrs. |
| title | Earnings management and corporate governance: an analysis based on the adoption of IFRS in Brazil |
| title_full | Earnings management and corporate governance: an analysis based on the adoption of IFRS in Brazil |
| title_fullStr | Earnings management and corporate governance: an analysis based on the adoption of IFRS in Brazil |
| title_full_unstemmed | Earnings management and corporate governance: an analysis based on the adoption of IFRS in Brazil |
| title_short | Earnings management and corporate governance: an analysis based on the adoption of IFRS in Brazil |
| title_sort | earnings management and corporate governance an analysis based on the adoption of ifrs in brazil |
| topic | earnings management; corporate governance; ifrs. |
| url | https://periodicos.ufrn.br/ambiente/article/view/25718 |
| work_keys_str_mv | AT brunochaconprata earningsmanagementandcorporategovernanceananalysisbasedontheadoptionofifrsinbrazil AT leonardoflach earningsmanagementandcorporategovernanceananalysisbasedontheadoptionofifrsinbrazil |