Portal de Periódicos da CAPES

Political competition as a motivation for earnings management close to zero: the case of Portuguese municipalities

2020; Emerald Publishing Limited; Volume: 32; Issue: 3 Linguagem: Inglês

10.1108/jpbafm-10-2018-0109

1945-1814

Augusta Ferreira, João Baptista da Costa Carvalho, Fátima Pinho,

Fiscal Policies and Political Economy

Purpose The main purpose of this paper is to evaluate if, motivated by political competition, municipalities engage in earnings management practices through discretionary accruals. Design/methodology/approach Quantitative methodology. Findings Results indicate that, in those municipalities where political competition is greatest, there is a greater tendency to report positive net earnings close to zero. This study also indicates that for such purpose, discretionary accruals are used. Originality/value The purpose of this paper is to respond to the lack of information in the area of earnings management in the public sector, to be able to evaluate responsibility, performance and efficiency regarding the allocation of public resources and the degree of satisfaction of citizens/voters' needs-accountability.