MODERATOR EFFECT OF THE CONCENTRATION OF SHAREHOLDING CONTROL ON THE RELATIONSHIP BETWEEN EARNINGS MANAGEMENT AND DIVIDENDS: EVIDENCES OF THE BRAZILIAN CAPITAL MARKET

Name: Vitor Correa da Silva
Type: PhD thesis
Publication date: 29/04/2020
Advisor:

Name Rolesort ascending
Alfredo Rodrigues Leite da Silva Co-advisor *
Annor da Silva Junior Advisor *

Examining board:

Name Rolesort ascending
Teresa Cristina Janes Carneiro Internal Examiner *
FÁBIO MORAES DA COSTA External Examiner *
Jose Elias Feres de Almeida External Examiner *
Patrícia Maria Bortolon External Examiner *
Alfredo Rodrigues Leite da Silva Co advisor *
Annor da Silva Junior Advisor *

Summary: This research aims to identify the moderating effect exerted by the shareholding concentration in the relationship between accruals earnings management and the dividends in the Brazilian public firms traded in [B]³. Considering that earnings management represents managerial choices that have an interest in skewing the accounting earnings and that the dividends is
influenced by that earnings, it is assumed that earnings management would have the potential to explain the dividends, since the first could, for example, be used to justify a smaller distribution of the second. Furthermore, considering the presence of type II agency conflict in the Brazilian capital market, it is understood that the shareholding concentration could further
strengthen the relationship between earnings management and dividends, in this case, having a moderator effect. Thus, a descriptive-exploratory research with a quantitative approach was carried out and a sample with 1,083 company/year observations from 2011 to 2018 was used.
The statistical technique of regression analysis was used to test the relationship between the variables. The results suggest that the shareholding concentration does not moderate the relationship between earnings management and dividends, probably because earnings management is not related to dividends in Brazilian firms. Two possible explanations have
been proposed for this finding: i) the decisions about earnings management and dividends have different and unrelated determinants and; ii) there is a low need for Brazilian firms to justify decisions on the dividends. However, it was identified that the increase in the difference between the free float of preferred stocks and the free float of common stocks is related to a reduction in the dividends payment, an aspect consistent with the minority shareholders expropriation hypothesis proposed by the agency's theory. Thus, it is believed
that the research is able to provide theoretical contributions regarding the shareholding concentration, earnings management and dividends in Brazilian firms; methodological contributions on the use of the moderating variable and; practical contributions for pointing out potential harmful effects for minority shareholders arising from the difference between the free float of preferred stokes and the free float of common stokes.

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