MINIMIZING VARIABILITY OF ACCOUNTING RESULTS: AN EMPIRICAL STUDY OF INCOME SMOOTHING IN BRAZIL

Abstract

This research has investigated whether Brazilian open companies manage their results with the purpose of reducing their variability. The data encompassing the period from 1995 to 1999 were collected from the Economática system. Some specific accounts’ effects were empirically controlled, verifying their impacts on the variability of results: depreciation expenses, provision for doubtful debtors and non-operational results are examples of monitored elements. The study has pointed out that, at the moment of deciding on expenses amount to be recognized, the concern with the reduction of variability of results is a conditioning factor. Taking these observations into account, one should be careful when analyzing adopted cost allocation methods, because they can be strategically defined to influence the accounting result. Keywords: Management. Accouting results. Brazilian open companies.