Effect of Law 13.506/2017 on the Occurrence of Irregularities in the Financial Statements of Major Taxpayers Monitored by
the Receita Federal do Brasil
Name: THALIS ALEXANDRE SOTERO
Publication date: 27/03/2025
Examining board:
Name |
Role |
|---|---|
| LUIZ CLAUDIO LOUZADA | Examinador Interno |
| ORLEANS SILVA MARTINS | Examinador Externo |
| VAGNER ANTONIO MARQUES | Presidente |
Summary: Accounting irregularities can result from various factors, such as deficiencies in internal controls, financial pressures to meet market expectations, and legislative and tax loopholes. These practices generate informational asymmetry and financial manipulation, distort asset prices in financial and capital markets, and reduce economic agents’ confidence, intensifying regulation and the demand for greater corporate transparency. In the tax context, irregularities may arise from strategies aimed at reducing tax burdens or maximizing benefits, highlighting the relationship between oversight and tax compliance. In Brazil, the oversight of major tax payers, structured under the differentiated and special monitoring regimes, aims to mitigate evasive practices, while Law No. 13,506/2017 increased penalties for financial infractions. However, the impact of major taxpayer monitoring and Law No. 13,506/2017 on accounting irregularities has not yet been widely explored. This research aimed to analyze the effect of Law No. 13,506/2017 on the occurrence of irregularities in the financial statements of major taxpayers monitored by the Brazilian Federal Revenue Service (RFB) and listed on Brasil, Bolsa, Balc˜ ao (B3), using data from 2010 to 2023. The sample consisted of 3,655 observati ons, of which 854 were restatements and 691 Administrative Sanctioning Processes (PAS). To assess the impact of tax monitoring and Law No. 13,506/2017, the analysis employed descrip tive statistics, Spearman’s correlation, and different econometric models, including staggered Differences-in-Differences (DiD), Regression Discontinuity Design (RDD), and logistic regres sion. Overall, the results indicate that companies under differentiated monitoring had a higher incidence of restatements and PAS, whereas those subject to special monitoring contributed to a reduction in legal liabilities, reflecting different levels of tax compliance. Additionally, Law No. 13,506/2017 strengthened regulatory enforcement, increasing the likelihood of detecting irregularities in financial statements. This research expands the literature by examining the rela tionship between tax oversight and the quality of financial disclosure, highlighting the impact of stricter tax monitoring on the incidence of irregularities. The findings also assist regulators in improving enforcement mechanisms and help investors assess transparency and informational risk. Furthermore, it contributes to the debate on tax reforms, tax compliance, and accounting practices, supporting the development of strategies to strengthen corporate governance and regulatory supervision
