Earnings management in private social solidarity institutions

Abstract

Accounting manipulation is a current issue reported across various contexts. This descriptive study aims to verify the existence of earnings management in the context of Private Social Solidarity Institutions (IPSS) and to identify the motivations underlying these practices. The sample comprises 14 Portuguese institutions, totaling 58 observations between 2009 and 2014. Data analysis followed a quantitative approach using descriptive and correlational statistics. To test the existence of earnings management, a model based on aggregated accruals (Jones Model, 1991) and a complementary model based on the distribution of results frequency (Burgstahler and Dichev, 1997) were used. The results indicate the presence of earnings management practices in this sector, with motivations related to institutional profitability.