Intangible assets and earnings management: an analysis of Brazilian companies listed at the BM&FBovespa

Abstract

Considering the increasing visibility and interest that the themes intangible assets and earnings management have been attracting in researchers and in companies, this study aimed to analyze the relationship between the proportion of intangible assets in total assets and earnings management in Brazilian companies listed in different levels of BM&FBovespa Corporate Governance. We carried out a descriptive research, conducted through document analysis and a quantitative approach of the data that were obtained through the accompanying notes, management reports, and Economática database for the period 2009 to 2010. The sample comprised 203 companies listed in different levels of BM&FBovespa Corporate Governance that presented a balance of intangible assets during the period. Initially we calculated the percentage of intangible assets in relation to total assets for each company. Then we calculated the earnings management through the model of Kang and Sivaramakrishnan (1995). For the data analysis, descriptive statistics measures and the Pearson correlation analysis were used. The survey results showed a good representation of the intangible assets and considerable rates of earnings management. They also showed that there were statistically significant correlations between intangibility and earnings management only among companies listed in the Novo Mercado, indicating that this level of corporate governance firms with higher percentages of intangible assets in relation to total assets had lower levels of earnings management.

Keywords: intangible assets, earnings management, Brazilian companies.