Mayor re-election and earnings management

Evidence from Portuguese municipalities

Bibliographic Data

ID20201366
AuthorsAugusta Ferreira (0000-0003-1659-3309, University of Aveiro, corresponding author)
Year2024
Volume36
Issue3
Pages296-319
Publication date2024-07-04
Peer ReviewedYes
Open AccessYes
TypeARTICLE
VenueJournal of Public Budgeting Accounting & Financial Management (JOURNAL)
Journal identifiersISSN: 1096-3367 • E-ISSN: 1945-1814
PublisherEmerald (PUBLISHER)
DOI10.1108/jpbafm-01-2023-0005
OpenAlexW4389451579
LanguageEN
Citations received2
References cited36

Purpose The aim of this paper is to investigate whether Mayors in Portugal engage in earnings management close to zero with the motivation of re-election. Design/methodology/approach The data used in this study were annual financial information from Portuguese municipalities from 2005 to 2016, as well as data on elections and Mayor re-elections involving three political cycles. The methodologies employed were quantitative, including graphical and panel data regressions. Findings The results indicate that municipalities used discretionary accruals to engage in earnings management to report net earnings close to zero, and re-election seems to be a motivation for earnings management behaviour. Furthermore, the results suggest that municipalities in which the Mayor is re-elected are less likely to report positive net earnings close to zero. Originality/value This paper makes a valuable contribution to the literature on earnings management in municipalities. At the theoretical level, it makes it possible to identify whether re-election is a motivation for earnings management and, in this sense, to identify patterns of behaviour by managers. On a practical level, the knowledge of a manager's behaviour patterns will help to anticipate his or her future behaviour and, consequently, may prevent inefficiencies

Accrual · Business · Earnings · Earnings Management · Econometrics · Economics · Originality · Panel data · Political science · Politics · Portuguese · Qualitative research · Social science · Sociology · Auditing, Earnings Management, Governance · Computer Science · Corporate Taxation and Avoidance · Fiscal Policies and Political Economy · Accounting

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