Abstract

We analyzed the relationship between earnings management and the cost of debt using a sample of 3,503 Brazilian privately held companies. In doing so, we discuss the fundamentals of earnings management and the specific economics of privately held companies in Brazil and then hypothesize how these relationships come about. Our proxies for earnings management were modified Jones and modified Jones with ROA (return on assets). We then ran their residuals as explanatory variables for the cost of debt. Our findings point to the importance of earnings quality in privately held companies and the impact of earnings management on the cost of debt, suggesting that the higher the levels of earnings management, the higher the cost of debt, even when controlling by other variables that can influence this relationship. Our findings may also serve to encourage privately held companies to concern themselves with the quality of accounting earnings and inhibit earnings management practices that could increase their cost of debt.

摘要

我们使用 3,503 家巴西私营公司的样本分析了盈余管理与债务成本之间的关系。在此过程中，我们讨论了盈余管理的基本原理和巴西私营公司的具体经济，然后假设这些关系是如何产生的。我们的盈余管理代理是经过修正的琼斯和经过 ROA（资产回报率）修正的琼斯。然后我们将它们的残差作为债务成本的解释变量。我们的研究结果指出了私人控股公司盈余质量的重要性以及盈余管理对债务成本的影响，这表明盈余管理水平越高，债务成本就越高，即使在受其他变量控制时，影响这种关系。