The relationship between corporate governance and earnings management in brazilian companies.
DOI:
https://doi.org/10.11606/rco.v7i19.55509Keywords:
Earnings Management, Corporate Governance, DiscricionaryAbstract
This study aims to investigate the association between Corporate Governance and earnings management in Brazilian companies. The study sample consists in 108 companies listed on the BM&FBOVESPA in the years 2008 to 2010. As an approximation for Corporate Governance was used a broad index proposed by Leal Carvalhal-da-Silva, 2005. As proxy of earnings management, it was used the discretionary accruals estimated from the model proposed by Kang and Sivaramakrishnan (1995). As control variables for Corporate Governance Index, it was used the variables, size, leverage and performance. Considering that the discretion of management as a result of the separation of ownership and control, and the set of motivations associated to opportunism, the underlying hypothesis of this study was that Corporate Governance mechanisms behave as inhibitors of earnings management. At the significance level of 1%, it was observed that the intensity of earnings management is lower in companies with intensive presence of governance mechanisms. These results corroborate to discussions concerning the presence of a trade-off between Corporative Governance structures and accounting choices directed to manage earnings.
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