Resumo

To gain competitiveness, firms emit several signals, which differentiate them from others, based on Signaling Theory. Thus, the firms, over time, start to obtain a certain prestige given by the stakeholders, constituting in their corporate reputation. Reputation is the prestige or recognition of stakeholders that a firm performs good practices in its management of resources. Reputable firms would perform better and persistently because of competitive advantage and they would not have opportunistic earnings management practices for better performance, since these firms have economic benefits.

This study uses the firms indicated to the Transparency Trophy of the ANEFAC, FIPECAFI and Serasa Experian Initiative. Since, firms reputed for a better transparency of their accounting practices would engage less in earnings management, since the companies do not want to lose the competitive advantage obtained by means of the reputation, and because they are exposed in the media, so they tend to be careful about their accounting practices. Based on that, this study aims to investigate the relationship between corporate reputation and earnings management in public companies listed in B3.

In the context of Signaling Theory, signals work as discretionary mechanisms in an environment of informational asymmetry, capable of altering beliefs and transmitting information to other, which is related to reputation. Several authors state that firms with a better reputation can obtain a competitive advantage, thus, firms with a higher reputation would not have the need to engage in earnings management, since it, opportunistically, seeks to increase profit in the period. Thus, it involves opportunistic manager behavior that changes the accounting numbers, affecting the information quality.

The sample is composed of 217 firms (1,361 observations) of all non-financial companies listed in Brasil, Bolsa, Balcão (B3), during a period between 2010 and 2016. Earnings management is measured by Jones (1991) and modified by Dechow et al. (1995), Larcker and Richardson (2004) and Kothari, Leone and Wasley (2005). Corporate reputation (REP) is a binary variable based on the Transparency Trophy of the ANEFAC, FIPECAFI and Serasa Experian Initiative. This study includes some control variables: firm size, return on assets, leverage and sales growth.

Corporate reputation through accounting transparency has a negative relationship with accruals discretionary, so the H1 is not rejected. Reputation based on the accounting information quality is well-liked by investors and creditors, because it is able to reduce opportunistic practices of earnings management that sometimes arise due to agency conflicts. In addition, when the firms seek to have quality and transparent financial reports, the managers reduce their practices of earnings management, perhaps using discretionary accruals only to demonstrate the real economic situation of the firm.

Therefore, this study brings contributions both for the professional field, as well as for the academic field. For the professional, the study shows that companies should focus on the quality of their financial reports, to obtain corporate reputation. In addition, having a good reputation is a signal to shareholder, creditors and other stakeholders regarding the quality of accounting information, and confers a competitive advantage, thus, demonstrating that reputable companies are a good investment.

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