Income smoothing in Brazilian credit unions: the effects of default
Purpose: This research aims to analyze whether credit unions manage their accounting results in order to smooth them through the provision for doubtful accounts (income smoothing), from a default perspective. Methodology: The sample reaches 938 unique cooperatives considering the period from Dece...
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| Format: | Article |
| Language: | Portuguese |
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Universidade Federal do Rio Grande do Norte
2024-01-01
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| Series: | Revista Ambiente Contábil |
| Subjects: | |
| Online Access: | https://periodicos.ufrn.br/ambiente/article/view/34807 |
| _version_ | 1797360807921582080 |
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| author | Jonatas Dutra Sallaberry Lauren Dal Bem Venturini Arthur Frederico Lerner Leonardo Flach |
| author_facet | Jonatas Dutra Sallaberry Lauren Dal Bem Venturini Arthur Frederico Lerner Leonardo Flach |
| author_sort | Jonatas Dutra Sallaberry |
| collection | DOAJ |
| description | Purpose: This research aims to analyze whether credit unions manage their accounting results in order to smooth them through the provision for doubtful accounts (income smoothing), from a default perspective.
Methodology: The sample reaches 938 unique cooperatives considering the period from December 2010 to December 2018, with data from the Central Bank of Brazil, tested using the multiple regression statistical technique, in quarterly panels.
Results: The variation in the stock of credit operations and the adjusted net income were not statistically significant in the model, however it was not possible to accept the hypothesis that credit unions use the allowance for loan losses (PCLD) as a mechanism for managing results. The interest rate implicit in the result of income from credit operations was significant, and therefore related to the PCLD variation, while the condition of free admission did not show statistical significance. The variation in default was significant in the model, with a negative coefficient, implying consistency with the earnings management hypothesis, since in a scenario of higher default (risk) the relationship is negative and, therefore, PCLD levels are lower, avoiding potential negative results.
Contributions of the Study: The results indicate the absence of earnings management by PCLD in the sample and period, contributing to the discussion of the relationships between earnings management variables. This enables credit unions to reflect on their internal corporate governance structure. In addition, the evidence contributes to the progress of the literature on earnings manipulation in credit unions, for which there are few studies available and play an important role in the Brazilian market, ensuring funding flows to economic sectors not served by traditional banking institutions. |
| first_indexed | 2024-03-08T15:45:00Z |
| format | Article |
| id | doaj.art-8f688a3c8fe54e19b98a59e03e346f10 |
| institution | Directory Open Access Journal |
| issn | 2176-9036 |
| language | Portuguese |
| last_indexed | 2024-03-08T15:45:00Z |
| publishDate | 2024-01-01 |
| publisher | Universidade Federal do Rio Grande do Norte |
| record_format | Article |
| series | Revista Ambiente Contábil |
| spelling | doaj.art-8f688a3c8fe54e19b98a59e03e346f102024-01-09T13:27:14ZporUniversidade Federal do Rio Grande do NorteRevista Ambiente Contábil2176-90362024-01-0116110.21680/2176-9036.2024v16n1ID3480738926Income smoothing in Brazilian credit unions: the effects of defaultJonatas Dutra Sallaberry0https://orcid.org/0000-0001-7492-727XLauren Dal Bem Venturini1https://orcid.org/0000-0003-4185-9842Arthur Frederico Lerner2https://orcid.org/0000-0002-7027-0562Leonardo Flach3https://orcid.org/0000-0002-4316-0704Federal University of Paraná. Federal University of Santa Catarina (UFSC).Federal University of Santa Catarina (UFSC).Federal University of Santa Catarina (UFSC). Purpose: This research aims to analyze whether credit unions manage their accounting results in order to smooth them through the provision for doubtful accounts (income smoothing), from a default perspective. Methodology: The sample reaches 938 unique cooperatives considering the period from December 2010 to December 2018, with data from the Central Bank of Brazil, tested using the multiple regression statistical technique, in quarterly panels. Results: The variation in the stock of credit operations and the adjusted net income were not statistically significant in the model, however it was not possible to accept the hypothesis that credit unions use the allowance for loan losses (PCLD) as a mechanism for managing results. The interest rate implicit in the result of income from credit operations was significant, and therefore related to the PCLD variation, while the condition of free admission did not show statistical significance. The variation in default was significant in the model, with a negative coefficient, implying consistency with the earnings management hypothesis, since in a scenario of higher default (risk) the relationship is negative and, therefore, PCLD levels are lower, avoiding potential negative results. Contributions of the Study: The results indicate the absence of earnings management by PCLD in the sample and period, contributing to the discussion of the relationships between earnings management variables. This enables credit unions to reflect on their internal corporate governance structure. In addition, the evidence contributes to the progress of the literature on earnings manipulation in credit unions, for which there are few studies available and play an important role in the Brazilian market, ensuring funding flows to economic sectors not served by traditional banking institutions.https://periodicos.ufrn.br/ambiente/article/view/34807accruals; earnings management; provision; default; banks; cooperative. |
| spellingShingle | Jonatas Dutra Sallaberry Lauren Dal Bem Venturini Arthur Frederico Lerner Leonardo Flach Income smoothing in Brazilian credit unions: the effects of default Revista Ambiente Contábil accruals; earnings management; provision; default; banks; cooperative. |
| title | Income smoothing in Brazilian credit unions: the effects of default |
| title_full | Income smoothing in Brazilian credit unions: the effects of default |
| title_fullStr | Income smoothing in Brazilian credit unions: the effects of default |
| title_full_unstemmed | Income smoothing in Brazilian credit unions: the effects of default |
| title_short | Income smoothing in Brazilian credit unions: the effects of default |
| title_sort | income smoothing in brazilian credit unions the effects of default |
| topic | accruals; earnings management; provision; default; banks; cooperative. |
| url | https://periodicos.ufrn.br/ambiente/article/view/34807 |
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