Income smoothing and use of derivatives instruments in non-financial companies listed on BM&FBovespa

Authors

  • Henrique Portulhak Universidade Federal do Paraná Author
  • Susana Cipriano Dias Raffaelli Universidade Federal do Paraná Author
  • Pedro Ylunga Costa da Silva Universidade Federal do Paraná Author
  • Rodrigo Oliveira Soares Universidade Federal do Paraná Author

DOI:

https://doi.org/10.4025/enfoque.v33i2.21182

Keywords:

Earnings management, Income smoothing, Derivative financial instruments

Abstract

This paper aims to investigate whether income smoothing and use of derivative financial instruments are related as substitute or complementary practices regarding organizational policies to reduce the volatility of corporate earnings. In order to reach this goal, 214 non-financial companies listed on BM&FBOVESPA stock exchange between 2005 and 2011were analyzed and Eckel (1981) model was applied in order to gather which companies present income smoothing evidences during this period, besides qualitative analysis on explanatory notes to investigate which companies used derivatives in the final year. Chi-square test with Yates correction was employed in order to verify the existence of correlations between income smoothing and derivative instruments. Results indicated, considering the impossibility of rejecting the null hypothesis of the chi-square test with Yates correction, evidence for an inverse relationship between the aforementioned variables. Through the results of this test, it is suggested that organizational policies for use of income smoothing and derivatives can be acting as resource substitutes for non-financial enterprises stock dealers on BM&FBOVESPA, thus meeting individual findings in other international researches.

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Author Biographies

  • Henrique Portulhak, Universidade Federal do Paraná
    Mestrando em Contabilidade pela Universidade Federal do Paraná; Contador do Hospital de Clínicas da Universidade Federal do Paraná.
  • Susana Cipriano Dias Raffaelli, Universidade Federal do Paraná
    Mestranda em Contabilidade pela Universidade Federal do Paraná
  • Pedro Ylunga Costa da Silva, Universidade Federal do Paraná
    Mestrando em Contabilidade pela Universidade Federal do Paraná
  • Rodrigo Oliveira Soares, Universidade Federal do Paraná

    Professor do Programa de Pós-Graduação Mestrado em Contabilidade da UFPR; Doutor em Administração pela Universidade Federal de Rio Grande do Sul – UFRGS.

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Additional Files

Published

2014-09-09

Issue

Vol. 33 No. 2 (2014)

Section

Original Articles

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How to Cite

Portulhak, H., Dias Raffaelli, S. C., Costa da Silva, P. Y., & Oliveira Soares, R. (2014). Income smoothing and use of derivatives instruments in non-financial companies listed on BM&FBovespa. Enfoque: Reflexão Contábil, 33(2), 105-119. https://doi.org/10.4025/enfoque.v33i2.21182