Corporate fraud and earnings management: a study in brazilian bank institutions

Authors

DOI:

https://doi.org/10.4025/enfoque.v40i2.51591

Keywords:

Corporate fraud. Earnings management. Financial institutions.

Abstract

Accounting is an instrument used to reduce the information asymmetry, but in some situations, managers may use discretionary power in accounting method choices. This study aimed at verifying the relationship between the occurrence of corporate fraud and the earnings management in financial institutions. For this, it was first analyzed whether banking institutions practice results management. Thus, the discretionary portion of the PCLD was used as proxy of the management,
its achievement occurred in two ways, calculation according to CMN Resolution 2682/99
and the obtaining of regressors. After these values were used in regressions with adjusted net
income to identify the management presence in the banks analyzed. Binomial Logistic Regression
was used in order to assess the probability of earnings management fraud to occur. All
Brazilian financial institutions active in at least 20 quarters during the period from 2008 to 2017
were selected as a sample, which corresponds to 106 institutions. Thus, it was possible to observe
that the Brazilian financial institutions make use of the discretionary portion of LLP, aimed
at earnings management. No significant relationship was identified between the occurrence of
corporate fraud and the discretionary portion of LLP. This research contributes to other studies
related to corporate fraud and earnings management in Brazilian public and private financial
institutions, by showing a model to analyze the relationship of the Manager’s discretion with the
probability of fraud occurrence.

Downloads

Download data is not yet available.

Author Biographies

  • Maurício Soares de Faria Junior, Universidade Federal de Goiás

    Mestre em Ciências Contábeis - UFG
    Universidade Federal de Goiás – UFG
    Programa de Pós-Graduação em Ciências Contábeis – PPGCONT - UFG

  • Michele Rílany Rodrigues Machado, Programa de Pós-Graduação em Ciências Contábeis (PPGCC - UFG) - Professora

    Doutora em Administração – UNB
    Professora Adjunta da Universidade Federal de Goiás – UFG
    Programa de Pós-Graduação em Ciências Contábeis – PPGCONT - UFG

  • José Alves Dantas, Programa de Pós-Graduação em Ciências Contábeis (PPGCont - UNB) – Professor

    Doutor em Ciências Contábeis - UNB
    Professor Adjunto da Universidade de Brasília - UNB
    Programa de Pós-Graduação em Ciências Contábeis – PPGCONT - UNB

Downloads

Published

2021-03-10

Issue

Vol. 40 No. 2 (2021): Enf.: Ref. Cont.

Section

Original Articles

License

DECLARATION OF ORIGINALITY AND COPYRIGHTS

I Declare that current article is original and has not been submitted for publication, in part or in whole, to any other national or international journal. 

The copyrights belong exclusively to the authors. Published content is licensed under Creative Commons Attribution 3.0 (CC BY 3.0) guidelines, which allows sharing (copy and distribution of the material in any medium or format) and adaptation (remix, transform, and build upon the material) for any purpose, even commercially, under the terms of attribution.

Read this link for further information on how to use CC BY 3.0 properly.

 

How to Cite

Corporate fraud and earnings management: a study in brazilian bank institutions. (2021). Enfoque: Reflexão Contábil, 40(2), 115-134. https://doi.org/10.4025/enfoque.v40i2.51591