Earning management in Brazilian financial institutions
Autor(a) principal: | |
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Data de Publicação: | 2016 |
Outros Autores: | , |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Revista de Administração (São Paulo) |
Texto Completo: | http://old.scielo.br/scielo.php?script=sci_arttext&pid=S0080-21072016000200182 |
Resumo: | ABSTRACT The present study aims to study earnings management in a significant sample of 123 banks in the Brazilian market between 2001 and 2012. Given the important role that banks play in a country's economy, it is important to understand that there are discretionary factors involved in the reporting of a financial institution's profitability. Credit provisioning guidelines for Brazilian financial institutions are described in Resolution 2682/99 of the National Monetary Council (Conselho Monetário Nacional). Because of the discretion allowed in this resolution, loan loss provision is used as instrument of earnings management, which is not an illegal practice, but this behavior does affect the risk perception of agents and analysts, and they should be aware of it and understand it. We found that credit provisioning is used as an earnings management mechanism to smooth the net income of Brazilian financial institutions. Brazilian banks tend to avoid not only negative net income pre-loan loss provisions and taxes, but also negative net income pre-loan loss provisions and taxes in relation to the previous period. Contrary to the previous studies, it is not clear if banks avoid lower net income pre-loan loss provisions and taxes than a given peer group. |
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Revista de Administração (São Paulo) |
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Earning management in Brazilian financial institutionsBrazilian financial institutionsearning managementloan loss provisionpanel data regressionABSTRACT The present study aims to study earnings management in a significant sample of 123 banks in the Brazilian market between 2001 and 2012. Given the important role that banks play in a country's economy, it is important to understand that there are discretionary factors involved in the reporting of a financial institution's profitability. Credit provisioning guidelines for Brazilian financial institutions are described in Resolution 2682/99 of the National Monetary Council (Conselho Monetário Nacional). Because of the discretion allowed in this resolution, loan loss provision is used as instrument of earnings management, which is not an illegal practice, but this behavior does affect the risk perception of agents and analysts, and they should be aware of it and understand it. We found that credit provisioning is used as an earnings management mechanism to smooth the net income of Brazilian financial institutions. Brazilian banks tend to avoid not only negative net income pre-loan loss provisions and taxes, but also negative net income pre-loan loss provisions and taxes in relation to the previous period. Contrary to the previous studies, it is not clear if banks avoid lower net income pre-loan loss provisions and taxes than a given peer group.Departamento de Administração da Faculdade de Economia, Administração e Contabilidade da Universidade de São Paulo2016-06-01info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersiontext/htmlhttp://old.scielo.br/scielo.php?script=sci_arttext&pid=S0080-21072016000200182Revista de Administração (São Paulo) v.51 n.2 2016reponame:Revista de Administração (São Paulo)instname:Universidade de São Paulo (USP)instacron:USP10.5700/rausp1233info:eu-repo/semantics/openAccessBortoluzzo,Adriana BruscatoSheng,Hsia HuaGomes,Ana Luiza Portoeng2016-06-21T00:00:00Zoai:scielo:S0080-21072016000200182Revistahttp://rausp.usp.br/PUBhttps://old.scielo.br/oai/scielo-oai.phprausp@usp.br||reinhard@usp.br1984-61420080-2107opendoar:2016-06-21T00:00Revista de Administração (São Paulo) - Universidade de São Paulo (USP)false |
dc.title.none.fl_str_mv |
Earning management in Brazilian financial institutions |
title |
Earning management in Brazilian financial institutions |
spellingShingle |
Earning management in Brazilian financial institutions Bortoluzzo,Adriana Bruscato Brazilian financial institutions earning management loan loss provision panel data regression |
title_short |
Earning management in Brazilian financial institutions |
title_full |
Earning management in Brazilian financial institutions |
title_fullStr |
Earning management in Brazilian financial institutions |
title_full_unstemmed |
Earning management in Brazilian financial institutions |
title_sort |
Earning management in Brazilian financial institutions |
author |
Bortoluzzo,Adriana Bruscato |
author_facet |
Bortoluzzo,Adriana Bruscato Sheng,Hsia Hua Gomes,Ana Luiza Porto |
author_role |
author |
author2 |
Sheng,Hsia Hua Gomes,Ana Luiza Porto |
author2_role |
author author |
dc.contributor.author.fl_str_mv |
Bortoluzzo,Adriana Bruscato Sheng,Hsia Hua Gomes,Ana Luiza Porto |
dc.subject.por.fl_str_mv |
Brazilian financial institutions earning management loan loss provision panel data regression |
topic |
Brazilian financial institutions earning management loan loss provision panel data regression |
description |
ABSTRACT The present study aims to study earnings management in a significant sample of 123 banks in the Brazilian market between 2001 and 2012. Given the important role that banks play in a country's economy, it is important to understand that there are discretionary factors involved in the reporting of a financial institution's profitability. Credit provisioning guidelines for Brazilian financial institutions are described in Resolution 2682/99 of the National Monetary Council (Conselho Monetário Nacional). Because of the discretion allowed in this resolution, loan loss provision is used as instrument of earnings management, which is not an illegal practice, but this behavior does affect the risk perception of agents and analysts, and they should be aware of it and understand it. We found that credit provisioning is used as an earnings management mechanism to smooth the net income of Brazilian financial institutions. Brazilian banks tend to avoid not only negative net income pre-loan loss provisions and taxes, but also negative net income pre-loan loss provisions and taxes in relation to the previous period. Contrary to the previous studies, it is not clear if banks avoid lower net income pre-loan loss provisions and taxes than a given peer group. |
publishDate |
2016 |
dc.date.none.fl_str_mv |
2016-06-01 |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
http://old.scielo.br/scielo.php?script=sci_arttext&pid=S0080-21072016000200182 |
url |
http://old.scielo.br/scielo.php?script=sci_arttext&pid=S0080-21072016000200182 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
10.5700/rausp1233 |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
text/html |
dc.publisher.none.fl_str_mv |
Departamento de Administração da Faculdade de Economia, Administração e Contabilidade da Universidade de São Paulo |
publisher.none.fl_str_mv |
Departamento de Administração da Faculdade de Economia, Administração e Contabilidade da Universidade de São Paulo |
dc.source.none.fl_str_mv |
Revista de Administração (São Paulo) v.51 n.2 2016 reponame:Revista de Administração (São Paulo) instname:Universidade de São Paulo (USP) instacron:USP |
instname_str |
Universidade de São Paulo (USP) |
instacron_str |
USP |
institution |
USP |
reponame_str |
Revista de Administração (São Paulo) |
collection |
Revista de Administração (São Paulo) |
repository.name.fl_str_mv |
Revista de Administração (São Paulo) - Universidade de São Paulo (USP) |
repository.mail.fl_str_mv |
rausp@usp.br||reinhard@usp.br |
_version_ |
1748936717213106176 |