Earnings management in Brazil: estrategic groups as a new explanatory variable
DOI:
https://doi.org/10.11606/rco.v3i6.34742Keywords:
strategic groups, earnings management, accruals, strategyAbstract
Studies regarding incentives, practices and ways to detect earnings management have been developed and grew up over the eighties. In this way, this paper verifies the possibility to introduce "strategic groups" as an explanatory variable to detect earnings management. The sample consists of public companies listed on São Paulo Stock Exchange (BOVESPA) in the period from 2000 to 2003, this period allow us to develop more number of Strategic Groups (FARIA et al, 2005). It was possible to identify 21 strategic groups among 10 industries in the Brazilian economy, totalizing 348 firm-year observations. Two models were applied to detect earnings management - the Jones Modified Model (1995) and KS Model (1995). The results indicate that earnings management occurs in seven strategic groups according to Jones Modified Model (1995) and in nine strategic groups according to KS model (1995). Furthermore, the results indicate the existence of heterogeneous earnings management practices among firms within the same industry, suggesting the usefulness of strategic groups. This paper contributes to the emerging discussion about earnings management practices, suggesting the introduction of this new explanatory variable for future studies.Downloads
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