Workforce and earnings management: Evidence in the Brazilian capital market
ABSTRACT We aimed to investigate the relationship between workforce [força de trabalho (FT)] and earnings management in the Brazilian capital market and, additionally, identify whether operating activities management is a substitute for management by accruals. Evidence of the effect of the FT on ear...
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| Format: | Article |
| Language: | English |
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Universidade de São Paulo
2022-04-01
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| Series: | Revista Contabilidade & Finanças |
| Subjects: | |
| Online Access: | http://www.scielo.br/scielo.php?script=sci_arttext&pid=S1519-70772022000200300&tlng=pt |
| _version_ | 1811292068213948416 |
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| author | Marcelo Cardoso Rocha Antonio Gualberto Pereira José Sérgio Casé de Oliveira |
| author_facet | Marcelo Cardoso Rocha Antonio Gualberto Pereira José Sérgio Casé de Oliveira |
| author_sort | Marcelo Cardoso Rocha |
| collection | DOAJ |
| description | ABSTRACT We aimed to investigate the relationship between workforce [força de trabalho (FT)] and earnings management in the Brazilian capital market and, additionally, identify whether operating activities management is a substitute for management by accruals. Evidence of the effect of the FT on earnings management practice is controversial, sometimes showing an effect on the reduction or smoothing of profit or even no effect. In Brazil, there are no studies that investigate how the intensity of the FT affects the managers’ behavior regarding the manipulation of profit. The research is relevant to the regulatory bodies because it brings empirical evidence of the incentives generated by the pressure of the FT so that the top executives reduce the result of the period, in a substitute way, to the manipulation of the company's operational activities. In addition, it is relevant for users of accounting information, as it demonstrates that the FT influences the recognition of results, affecting the quality of accounting information. The findings may assist regulatory bodies and investors, as it demonstrates that pressure from the FT is an important incentive for decision-making by executives and workers at the operating levels of companies and can support the improvement of labor regulations. Following Pae (2005), we use Jones' modified model (1991) with lagged accruals to detect earnings management. To capture the FT intensity, we employed the proxies presented by Hilary (2006) and a variable calculated from the statement of value added [demonstração do valor adicionado (DVA)]. We analyzed 119 companies listed on the Brazilian stock exchange during the period 2012-2018. It were found that the intensity of the FT negatively influences earnings management by accruals [gerenciamento de resultados por accruals (GRA)], expanding the evidence on the effects of workers' bargaining power on accounting choices. |
| first_indexed | 2024-04-13T04:39:52Z |
| format | Article |
| id | doaj.art-ac7611b2a08049a4a83a924c30f9b33e |
| institution | Directory Open Access Journal |
| issn | 1808-057X |
| language | English |
| last_indexed | 2024-04-13T04:39:52Z |
| publishDate | 2022-04-01 |
| publisher | Universidade de São Paulo |
| record_format | Article |
| series | Revista Contabilidade & Finanças |
| spelling | doaj.art-ac7611b2a08049a4a83a924c30f9b33e2022-12-22T03:02:02ZengUniversidade de São PauloRevista Contabilidade & Finanças1808-057X2022-04-01338930031410.1590/1808-057x202113310Workforce and earnings management: Evidence in the Brazilian capital marketMarcelo Cardoso Rochahttps://orcid.org/0000-0001-8053-3402Antonio Gualberto Pereirahttps://orcid.org/0000-0003-2354-6797José Sérgio Casé de Oliveirahttps://orcid.org/0000-0003-3031-4943ABSTRACT We aimed to investigate the relationship between workforce [força de trabalho (FT)] and earnings management in the Brazilian capital market and, additionally, identify whether operating activities management is a substitute for management by accruals. Evidence of the effect of the FT on earnings management practice is controversial, sometimes showing an effect on the reduction or smoothing of profit or even no effect. In Brazil, there are no studies that investigate how the intensity of the FT affects the managers’ behavior regarding the manipulation of profit. The research is relevant to the regulatory bodies because it brings empirical evidence of the incentives generated by the pressure of the FT so that the top executives reduce the result of the period, in a substitute way, to the manipulation of the company's operational activities. In addition, it is relevant for users of accounting information, as it demonstrates that the FT influences the recognition of results, affecting the quality of accounting information. The findings may assist regulatory bodies and investors, as it demonstrates that pressure from the FT is an important incentive for decision-making by executives and workers at the operating levels of companies and can support the improvement of labor regulations. Following Pae (2005), we use Jones' modified model (1991) with lagged accruals to detect earnings management. To capture the FT intensity, we employed the proxies presented by Hilary (2006) and a variable calculated from the statement of value added [demonstração do valor adicionado (DVA)]. We analyzed 119 companies listed on the Brazilian stock exchange during the period 2012-2018. It were found that the intensity of the FT negatively influences earnings management by accruals [gerenciamento de resultados por accruals (GRA)], expanding the evidence on the effects of workers' bargaining power on accounting choices.http://www.scielo.br/scielo.php?script=sci_arttext&pid=S1519-70772022000200300&tlng=ptworkforceearnings managementstatement of value added |
| spellingShingle | Marcelo Cardoso Rocha Antonio Gualberto Pereira José Sérgio Casé de Oliveira Workforce and earnings management: Evidence in the Brazilian capital market Revista Contabilidade & Finanças workforce earnings management statement of value added |
| title | Workforce and earnings management: Evidence in the Brazilian capital market |
| title_full | Workforce and earnings management: Evidence in the Brazilian capital market |
| title_fullStr | Workforce and earnings management: Evidence in the Brazilian capital market |
| title_full_unstemmed | Workforce and earnings management: Evidence in the Brazilian capital market |
| title_short | Workforce and earnings management: Evidence in the Brazilian capital market |
| title_sort | workforce and earnings management evidence in the brazilian capital market |
| topic | workforce earnings management statement of value added |
| url | http://www.scielo.br/scielo.php?script=sci_arttext&pid=S1519-70772022000200300&tlng=pt |
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