Study about tax incentives for the accounting earnings management in brazilian public companies
Previous studies about the influence of taxing on accountancy have shown that companies have incentives to manage their earnings aiming to reduce taxes. This fact suggests that managers have a discretionary behavior over the accounting components equity and income with the purpose of reducing the taxable earnings through accounting maneuvers; therefore, the value of the taxable earnings affects the amount of accruals present in the accounting results of companies. The objective of this study was to check whether the accounting earnings management is motivated by tax issues. The explanatory and descriptive survey was based on a sample of 286 firms-year, made up of the 50 largest Brazilian public companies listed in the magazine Exame Melhores e Maiores 2006, covering the period between 2000 and 2005. The research used McNichols and Wilson’s (1998) general earnings management model and also the modified Jones and KS operational models to estimate accruals. The results show that the econometric models have low predictive power; in relation to the research hypothesis, it cannot be affirmed that tax incentives have an affect on the measuring process of accounting numbers in Brazilian public companies.
Key words: earnings management, tax accounting, accounting information quality.
I grant the journal BASE the first publication of my article, licensed under Creative Commons Attribution license (which allows sharing of work, recognition of authorship and initial publication in this journal).
I confirm that my article is not being submitted to another publication and has not been published in its entirely on another journal. I take full responsibility for its originality and I will also claim responsibility for charges from claims by third parties concerning the authorship of the article.
I also agree that the manuscript will be submitted according to the journal’s publication rules described above.