2008) identified earnings management by credit unions that were at risk, seeking to gain time in the adequacy of the proportion of their net worth in relation to the assets weighted by the risk.
Since in international literature the inference about management of results in credit cooperatives is still inconclusive, and that in Brazil Earnings Management studies to assess the smoothing of results have indicated this practice for cooperatives affiliated with SICOOB and SICREDI, this article tries to answer the following research question: Do credit unions affiliated to UNICRED also use smoothing in their accounting results?
The current study replicates Thomas' (1989) twenty-year old research to ascertain if this type of earnings management continues today, particularly in light of the heightened scrutiny managers now face to present fair financial reporting.
Earnings management to avoid earnings decreases and losses.
Earnings management observed via board interlocking has a contagion effect on companies; that is, the participation of some members in other companies leads to good and bad management practices being shared between companies (Chiu, Teoh & Tian, 2013).
Studies demonstrate a connection between earnings management practices and interconnections between board members (Carrera, 2013; Chiu et al.
Linck, Netter, and Shu (2013) find that financially constrained firms can use earnings management
to signal profitable investment opportunities and help attract investor funds for those investments.
The manipulation of the cash component falls under real earnings management
Results: Hospitals with higher profit margin, current ratio, working capital, days of patient receivables outstanding and total wage are associated with more earnings management
, whereas those with larger size and higher debt level, asset turnover, days cash on hand, fixed asset age are associated with lower level of earnings manipulation.
They find that IFRS firms exhibit less earnings management
, less earnings smoothness, more timely recognition of losses and greater value relevance.
Previous studies find evidence of country-specific characteristics that affect the relation between IFRS adoption and earnings management
It is believed that banks have used earnings management
in the past and in the lead up to the 2008 financial crisis by manipulating the allowance for loan and lease losses account on the balance sheet.