Does the Latin Corporate Governance Model perform worse than others in preventing earnings management?

Carlos Alves and Ernesto Fernando R. Vicente ()
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Ernesto Fernando R. Vicente: Universidade Federal de Santa Catarina

FEP Working Papers from Universidade do Porto, Faculdade de Economia do Porto

Abstract: In this paper, by using a database of Portuguese and Brazilian firms, where the Latin Corporate Governance Model is traditionally predominant but increasingly out of fashion, we investigate whether the Latin Corporate Governance Model performs worse or better than others (variants of the Continental or Anglo-Saxon Models) in preventing earnings management. We conclude that, in general, companies with the Latin Model have lower levels of earnings management than the other companies, and that changing from the Latin Model to another model does not cause a decrease in the level of discretionary accruals. We also conclude that the firms that move away from the Latin Model are not necessarily those with the higher levels of discretionary accruals. Finally, we conclude that firms that are dual listed (through ADR) have lower levels of discretionary accruals, but firms which have the state as a qualified shareholder do not usually differ significantly from others.

Keywords: corporate governance; earnings management; accounting disclosure; government policy and regulation (search for similar items in EconPapers)
JEL-codes: G30 G38 M3 M40 (search for similar items in EconPapers)
Pages: 38 pages
Date: 2012-02
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Persistent link: https://EconPapers.repec.org/RePEc:por:fepwps:447

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