Earnings management by operational decisions and debt financing in the brazilian capital market

• Autor(a) principal: Cecilia Ferreira Chaves
• Data de Publicação: 2022
• Outros Autores: Wesley Cirino Dos Santos, Wagner Moura Lamounier
• Tipo de documento: Artigo
• Idioma: eng
• Título da fonte: Repositório Institucional da UFMG
• Texto Completo: http://hdl.handle.net/1843/60369
• topic: Capital structure; Earnings management by operational decisions; Brazilian capital market; Mercado de capitais; Gerenciamento

This article verified if management operational decisions at the publicly held companies is influenced by companies’ capital structures. It verified if some companies with a greater emphasis on debt financing would be more likely to practice earnings management by operational decision. The study used as a sample of the non-financial publicly held companies listed in the Brazilian capital market in the period from 2010 to 2018. As a result, it was found that there was a significant and positive correspondence between greater debt financing and a higher frequency of earnings management. Therefore, the increase in debt financing, regardless of the proxy used, implied an increase in earnings management by operational decisions. Furthermore, by analyzing the ratio between debt and equity it was found that the greater the long-term debt to the detriment of short-term debt, the more likely the managers of the firms will be to manage the results. Finally, in terms of the control variables created, the negative and significant relation between corporate governance and earnings management in the analysis of long-term debt financing stands out.