Effects of income smoothing practices on the conservatism of public companies listed on the BM & FBOVESPA

Revista Contabilidade & Finanças

José Elias Feres De Almeida²  Alfredo Sarlo Neto¹  Ricardo Furieri Bastianello¹  Eduardo Zandomenigue Moneque¹ 

[1] ,Universidade Federal do Espírito Santo, Brazil

关键词: conditional conservatism;    income smoothing;    accounting information;    capital markets;    conservadorismo condicional;    suavização de resultados;    informação contábil;    mercado de capitais;   

DOI  :  10.1590/S1519-70772012000100005

来源: SciELO

【 摘 要 】

The aim of this study was to investigate two aspects of accounting information that may be inherently related: income smoothing practices and conditional conservatism. Theoretically, the more a firm employs income smoothing, i.e., uses accruals to reduce the variability of profits, the less possibility there is for the timely acknowledgement of future economic losses (i.e., bad economic news) in profits. Eckel's model (1981) was used in this study to classify listed companies as smoothing or non-smoothing, and Basu's model (1997) was used to quantify the degree of conditional conservatism present in each firm. To make the results more robust, samples were created with annual stock return data from both March and December. The results indicated that non-smoothing firms had a higher degree of conditional conservatism, i.e., more opportunity to recognize future economic losses because the market could use the stock return data to anticipate future losses contained in the information regarding profits. This research made it possible to observe theoretical relationships between properties of accounting information: i) there is a relationship between income smoothing and conditional conservatism (i.e., accounting choices); ii) the informational environment of the Brazilian capital market contributes to the market distinction between smoothing and non-smoothing firms; and iii) the improvement of the capital market provides economic operators with greater insight into economic losses that are contained in accounting results.

【 授权许可】

CC BY   
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