Earnings Management and Valuation of Biological Assets
The use of fair value to measure the worth of biological assets allows discretionary choices when using discounted cash flow in the absence of an active market, influencing the quality of accounting information. The objective of this study was to investigate evidence of earnings management among Br...
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FUCAPE Business School
2015
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oai:doaj.org-article:e8939d8f798f45ef815b1220de957b9e2021-11-11T15:48:06ZEarnings Management and Valuation of Biological Assets1807-734Xhttps://doaj.org/article/e8939d8f798f45ef815b1220de957b9e2015-01-01T00:00:00Zhttp://www.redalyc.org/articulo.oa?id=123041058001https://doaj.org/toc/1807-734XThe use of fair value to measure the worth of biological assets allows discretionary choices when using discounted cash flow in the absence of an active market, influencing the quality of accounting information. The objective of this study was to investigate evidence of earnings management among Brazilian companies that have adopted fair value based on the discounted cash flow method. The firms were investigated with regard to: a) disclosure of the discount rate, b) BM&FBovespa corporate governance levels; and c) adherence to disclosure requirements in the Brazilian accounting standard CPC 29 (IAS 41). We analyzed 31 firms with significant biological assets from 2010 to 2012. The earnings management measurements were calculated according to the modified Jones, the Teoh, Welch and Wong (1998), and the KS models. The Mann-Whitney test of the means was applied and revealed evidence of greater earnings management for companies that use discounted cash flow, and the ones that least meet CPC 29 disclosure requirements, considering the KS model estimates. Regarding the other proposals, testing did not offer enough evidence of differences in discretionary accruals. In this sense, only hypotheses 1 and 4 are partially accepted, demanding more research in this area. We also present evidence in favor of adopting Exposure Draft ED/2013/08 Agriculture: Bearer Plants, Proposed amendments to IAS 16 and IAS 41, which proposes to measure biological assets at cost, because firms already following these rules showed lower earnings management in this study.Ricardo Luiz Menezes da SilvaPaula Carolina Ciampaglia NardiMaisa de Souza RibeiroFUCAPE Business Schoolarticleearnings managementbiological assetsagricultural productsfair valueias 41BusinessHF5001-6182ENPTBBR: Brazilian Business Review, Vol 12, Iss 4, Pp 1-26 (2015) |
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earnings management biological assets agricultural products fair value ias 41 Business HF5001-6182 |
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earnings management biological assets agricultural products fair value ias 41 Business HF5001-6182 Ricardo Luiz Menezes da Silva Paula Carolina Ciampaglia Nardi Maisa de Souza Ribeiro Earnings Management and Valuation of Biological Assets |
| description |
The use of fair value to measure the worth of biological assets allows discretionary choices when using discounted cash flow in the absence of an active market, influencing the quality of accounting information. The objective of this study was to investigate evidence of earnings management among Brazilian companies that have adopted fair value based on the discounted cash flow method. The firms were investigated with regard to: a) disclosure of the discount rate, b) BM&FBovespa corporate governance levels; and c) adherence to disclosure requirements in the Brazilian accounting standard CPC 29 (IAS 41). We analyzed 31 firms with significant biological assets from 2010 to 2012. The earnings management measurements were calculated according to the modified Jones, the Teoh, Welch and Wong (1998), and the KS models. The Mann-Whitney test of the means was applied and revealed evidence of greater earnings management for companies that use discounted cash flow, and the ones that least meet CPC 29 disclosure requirements, considering the KS model estimates. Regarding the other proposals, testing did not offer enough evidence of differences in discretionary accruals. In this sense, only hypotheses 1 and 4 are partially accepted, demanding more research in this area. We also present evidence in favor of adopting Exposure Draft ED/2013/08 Agriculture: Bearer Plants, Proposed amendments to IAS 16 and IAS 41, which proposes to measure biological assets at cost, because firms already following these rules showed lower earnings management in this study. |
| format |
article |
| author |
Ricardo Luiz Menezes da Silva Paula Carolina Ciampaglia Nardi Maisa de Souza Ribeiro |
| author_facet |
Ricardo Luiz Menezes da Silva Paula Carolina Ciampaglia Nardi Maisa de Souza Ribeiro |
| author_sort |
Ricardo Luiz Menezes da Silva |
| title |
Earnings Management and Valuation of Biological Assets |
| title_short |
Earnings Management and Valuation of Biological Assets |
| title_full |
Earnings Management and Valuation of Biological Assets |
| title_fullStr |
Earnings Management and Valuation of Biological Assets |
| title_full_unstemmed |
Earnings Management and Valuation of Biological Assets |
| title_sort |
earnings management and valuation of biological assets |
| publisher |
FUCAPE Business School |
| publishDate |
2015 |
| url |
https://doaj.org/article/e8939d8f798f45ef815b1220de957b9e |
| work_keys_str_mv |
AT ricardoluizmenezesdasilva earningsmanagementandvaluationofbiologicalassets AT paulacarolinaciampaglianardi earningsmanagementandvaluationofbiologicalassets AT maisadesouzaribeiro earningsmanagementandvaluationofbiologicalassets |
| _version_ |
1718433929848946688 |