FEDERAL TAX FINE AND EARNINGS MANAGEMENT IN
BRAZIL
Name: URIAS OTAVIANO VAZ
Type: MSc dissertation
Publication date: 05/06/2023
Advisor:
Name |
Role |
|---|---|
| JOSE ELIAS FERES DE ALMEIDA | Advisor * |
Examining board:
| Name |
Role |
|---|---|
| DONIZETE REINA | Internal Examiner * |
| VAGNER ANTONIO MARQUES | Internal Examiner * |
Summary: The objective of this study is to examine whether earnings management increase
when there is an increase in federal tax fines (quantity and values) in economic
sectors. The quantity and the values of tax fines issued annually, by economic sector, by the Receita Federal do Brasil (RFB), are made available in the annual oversight
reports by the federal agency. The unbalanced sample is made up of 3,168
observations, from 349 companies listed on Brasil, Bolsa, Balcão S.A. [B³], between
the years 2012 and 2021. The earnings management models used in this study
include practices via discretionary accruals and via real activities. To date, no studies
have been found that investigate the incentives for earnings management practices
arising from economic sectors, according to the information provided by the RFB in
its annual Reports, nor that carry out an analysis of possible relationships between
variations in tax fines in Brazilian companies. Using the TOBIT estimator, after
estimating earnings manipulation proxies, and classifying the companies in the
sample as they appear in the economic sectors applied by the RFB, it was possible
to find evidence of earnings management, whether via discretionary accruals or via
real activities. Finally, it was found that in the positive variation in the quantity of
oversight, there was a tendency to earnings manage through discretionary accruals, but when the increase variation was in oversight values, there were more results with
significance in real activities.
