Does Financial Crisis impact Earnings Management Evidence from Portuguese and UK

Inês Lisboa, Aleksandre Kacharava


Purpose: The main aim of this work is to analyse if 2008 financial crisis had impact on earnings management. We compare two countries with different legal forces in terms of quality of accounting to see the differences in firm’s involvement in earnings management. Finally we analyse which determinants impact management of results.

Design/methodology/approach: This study focus on Portuguese and UK listed firms from a large period, 2004 till 2014. We first use the Kothari, Leone & Wasley model (2005) to calculate the discretionary accruals, a proxy of earnings management. Then we analyse the impact of six determinants on earnings management.

Findings: Findings suggest that financial crisis had impact on firms’ tendency to manage financial results. Country effect is not statistically significant, even if the Portuguese and UK firms’ propensity to manage earnings is singular. Finally, firm’s size and indebt are two relevant characteristics to explain earnings management.

Originality/values: This research as three major contributions. First, we not only analyse if the firms in the sample manipulate results, but we also study the impact of some characteristics on earnings management, contributing to the enrichment of the literature. Moreover, we focus on two main effects: crisis and country effect. Studies analysing both effects in simultaneous are scarce. Finally, we also believe that results are relevant to both financial investors and regulators as they may understand which factors impact manipulation of results, and can take actions that may reduce the possibility of practicing earnings management.


Keywords:  earnings management, financial crisis, accruals, Portugal, UK




Título: "A Crise Financeira afeta o Earnings Management? Evidência de Portugal e Reino Unido"


Objetivos: O principal objetivo deste trabalho é analisar se a crise financeira de 2008 teve impacto no gerenciamento de resultados. Comparamos dois países com forças legais diferentes em termos de qualidade da contabilidade para ver as diferenças no envolvimento da empresa no gerenciamento de resultados. Finalmente, analisamos quais determinantes afetam o gerenciamento de resultados.

Desenho/metodologia/abordagem: Este estudo foca em empresas listadas em Portugal e Reino Unido de um grande período, de 2004 a 2014. Primeiro, usamos o modelo de Kothari, Leone & Wasley (2005) para calcular os accruals discricionários, uma proxy do gerenciamento de resultados. Em seguida, analisamos o impacto de seis determinantes no gerenciamento de resultados.

Resultados: As constatações sugerem que a crise financeira teve impacto na tendência das empresas em gerenciar resultados financeiros. O efeito país não é estatisticamente significativo, mesmo que a propensão das empresas portuguesas e britânicas em gerenciar ganhos seja singular. Finalmente, o tamanho e o endividamento da empresa são duas características relevantes para explicar o gerenciamento de resultados.

Originalidade/valor: Esta pesquisa tem três contribuições principais. Primeiro, analisamos não apenas se as empresas da amostra manipulam resultados, mas também estudamos o impacto de algumas características no gerenciamento de resultados, contribuindo para o enriquecimento da literatura. Além disso, focamos em dois efeitos principais: crise e efeito país. Estudos analisando ambos os efeitos em simultâneo são escassos. Por fim, também acreditamos que os resultados são relevantes para investidores financeiros e reguladores, pois eles podem entender quais fatores afetam a manipulação dos resultados e podem tomar ações que podem reduzir a possibilidade de praticar o gerenciamento de resultados.


Palavras-chave: gerenciamento de resultados, crise financeira, accruals, Portugal, Reino Unido

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