Evidence of the impact of religiosity on earnings management in Brazil
DOI:
https://doi.org/10.11606/issn.1982-6486.rco.2022.186587Keywords:
Discretionary accruals, Real activities, Risk aversion, Social Norm TheoryAbstract
The international literature points to evidence of the relationship between religiosity and the types of earnings management in countries that do not adopt the International Financial Reporting Standards. Therefore, the aim of the study is to investigate the association between religiosity and earnings management, in a country that adopts international standards. The earning management was estimated by the accruals and the real activities for a sample of 122 companies listed in Brasil, Bolsa, and Balcão in the period from 2010 to 2017. Religiousness corresponded to the percentage of people who declared to have a religion in the municipality where the company is headquartered. Through regression by the Ordinary Least Squares method, with panel data, it was verified that religiosity is negatively associated with accrual earnings management and positively associated with real earnings management. This result can be explained by risk aversion, a social norm used in the literature to characterize religious people. In religious environments, and therefore with a greater aversion to risk according to this literature, the manager would tend to use more real earnings management than accrual earnings management due to the risk of detection by auditors and regulatory bodies. This research contributes to the expansion of the understanding of the determinants of accounting quality, under the aspect of earnings management as well as the development of research on earnings management by pointing to religiosity as an additional variable in the theoretical models. The measure of religiosity is a limitation of the study, as the respondents' statements may differ from practice, and also the measure is subject to variations by neighborhood or region, in companies located in larger cities.
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Copyright (c) 2022 Simone Miranda dos Santos, Sirlei Lemes, Neirilaine Silva de Almeida
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