Sticky Costs Behavior and Earnings Management

Abstract

This study aims to analyze the relationship between cost asymmetry (Sticky Costs) behavior and earnings management practices of Brazilian companies. The methodology refers to descriptive, documentary and quantitative research. The sample comprised 160 Brazilian companies listed on BM&FBovespa between 2008 and 2017. Multiple linear regression models were used to analyze the data. We observed that accounting profit is affected by sticky costs behavior and by earnings management practices. Total accruals and part of earnings management are explained by costs asymmetric behavior. This paper contributes to the current research on the discussion that part of earnings management can be due to sticky costs. In addition, the results show that the Dechow, Sloan and Sweeney (1995) model could consider the asymmetry of costs as an interference variable on total accruals, in order to better estimate the discretionary accruals.

Does Sticky Cost Behavior Affect Earnings Quality? Evidence From Egypt

“…This prediction is consistent with the results of Chung et al (2019) which concluded that institutional monitoring decreases the degree of cost stickiness that leads to better performance in the future. Also, the predicted negative impact of cost stickiness on earnings quality is in line with the results of Silva et al (2019) which revealed that stickiness in cost behavior has a positive impact on abnormal accruals, i.e., cost stickiness positively affects earnings management practices which means a decline in earnings quality. Consequently, the second hypothesis can be formulated as follows: H2.…”

“…The current research tests the effect of sticky cost behavior on earnings quality, the second and third hypotheses, by establishing the model (2) following Banker and Byzalov (2014), Balakrishnan et al (2014), Bu et al (2015), Banker et al (2016), Silva et al (2019), and Fourati et al (2020). Like Bu et al (2015), the model (2) relies on sales levels rather than changes in sales since the dependent variable is the level of scaled earnings.…”

“…In addition, previous studies examined the impact of sticky cost behavior on another aspect of financial accounting which is earnings management. For instance, Silva et al (2019) investigated the effect of cost stickiness on earnings management among Brazilian firms. The results concluded that cost stickiness has a positive effect on discretionary accruals which is considered an indicator of earnings management practices.…”

Gerenciamento por decisões operacionais: alternativa para evitar reportar prejuízos

“…Por fim, com base na Tabela 6, destaca-se que o gerenciamento de resultados por atividades reais está diretamente associado ao tamanho da empresa conforme Cupertino et al (2017) e Gunny (2010). Duas possíveis explicações são a capacidade das grandes empresas de produzir mais, em algum momento, para aumentar o estoque (Reis et al, 2015) e o custo político que podem levar as empresas a gerenciar os resultados, visto que estão sob maior escrutínio público e dos órgãos de regulação (Scott, 2012;Silva, Zonatto, Dal Magro, & Klann, 2019). As demais variáveis de controle (MTB e ROA) não foram significativas conforme os resultados encontrados por Reis et al (2015).…”

Praktik manajemen laba: Sebuah kajian studi hermeneutika

“…Pada akhirnya, laba tunai juga akan memiliki dampak yang positif (Hung et al, 2018). Penelitian pada perusahaan di Brasil yang terdaftar dalam bursa antara tahun 2008-2017 mengamati bahwa laba akuntansi juga sangat dipengaruhi oleh manajemen laba yang dilakukan perusahaan, yang disebabkan oleh biaya tetap (Silva et al, 2018). Semakin intens praktik manajemen laba, semakin besar efek dampak negatifnya pada tingkat pengembalian aset perusahaan di tahun berikutnya (Nugroho & Eko, 2011).…”