IDEAS home Printed from
   My bibliography  Save this paper

Manipulação para Evitar Perdas: o Impacto do Conservantismo


  • José António Moreira

    () (CETE, Faculdade de Economia, Universidade do Porto)


In this paper I analyze the interaction between firms’ earnings management behavior and conservatism. I predict that firms having conservatism-related bad news in the period have more pervasive earnings management than firms having good news. Departing from Burgstahler and Dichev (1997) methodology to detect earnings management, and taking the sign of market returns as a proxy for conservatism effects, I find empirical evidence that supports the prediction of an interaction between firms’ earnings management behavior and conservatism. The evidence is thus consistent with the discontinuities around zero in the earnings distributions being driven, at least partly, by firms’ earnings management behavior, and is robust to controlling for other effects mentioned in the literature as potential determinants of such discontinuities.

Suggested Citation

  • José António Moreira, 2006. "Manipulação para Evitar Perdas: o Impacto do Conservantismo," CEF.UP Working Papers 0605, Universidade do Porto, Faculdade de Economia do Porto.
  • Handle: RePEc:por:cetedp:0605

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Thomas, Jacob & Zhang, Xiao-jun, 2000. "Identifying unexpected accruals: a comparison of current approaches," Journal of Accounting and Public Policy, Elsevier, vol. 19(4-5), pages 347-376.
    2. repec:bla:joares:v:37:y:1999:i::p:53-87 is not listed on IDEAS
    3. Ball, Ray & Shivakumar, Lakshmanan, 2005. "Earnings quality in UK private firms: comparative loss recognition timeliness," Journal of Accounting and Economics, Elsevier, vol. 39(1), pages 83-128, February.
    4. Steven Young, 1999. "Systematic Measurement Error in the Estimation of Discretionary Accruals: An Evaluation of Alternative Modelling Procedures," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 26(7&8), pages 833-862.
    5. repec:bla:joares:v:29:y:1991:i:2:p:193-228 is not listed on IDEAS
    6. Guay, W. & Kothari, S.P. & Watts, R.L., 1996. "A Market-Based Evaluation of Discretionary-Accrual Models," Papers 96-01, Rochester, Business - Financial Research and Policy Studies.
    7. Paul Hribar, 2002. "Errors in Estimating Accruals: Implications for Empirical Research," Journal of Accounting Research, Wiley Blackwell, vol. 40(1), pages 105-134, March.
    8. repec:bla:joares:v:34:y:1996:i::p:107-115 is not listed on IDEAS
    9. Barth, Mary E. & Beaver, William H. & Landsman, Wayne R., 1998. "Relative valuation roles of equity book value and net income as a function of financial health," Journal of Accounting and Economics, Elsevier, vol. 25(1), pages 1-34, February.
    10. Basu, Sudipta, 1997. "The conservatism principle and the asymmetric timeliness of earnings," Journal of Accounting and Economics, Elsevier, vol. 24(1), pages 3-37, December.
    11. Givoly, Dan & Hayn, Carla, 2000. "The changing time-series properties of earnings, cash flows and accruals: Has financial reporting become more conservative?," Journal of Accounting and Economics, Elsevier, vol. 29(3), pages 287-320, June.
    12. repec:bla:joares:v:33:y:1995:i:2:p:353-367 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. José António Moreira, 2006. "Are Financing Needs a Constraint to Earnings Management? Evidence for Private Portuguese Firms," CEF.UP Working Papers 0610, Universidade do Porto, Faculdade de Economia do Porto.

    More about this item


    Earnings management; conservatism; earnings distribution discontinuities.;

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • L29 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Other

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:por:cetedp:0605. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ana Bonanca). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.