International Journal of

ADVANCED AND APPLIED SCIENCES

EISSN: 2313-3724, Print ISSN: 2313-626X

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 Volume 8, Issue 9 (September 2021), Pages: 15-28

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 Original Research Paper

 Title: Practices and mechanisms to mitigate the negative effects of accounting-based earnings management: An empirical study from the professionals’ perspective

 Author(s): Albertina Paula Monteiro 1, *, Orlando Lima Rua 2, José Carlos Figueira 3, Eduardo Leite 4

 Affiliation(s):

 1Porto Accounting and Business School, Polytechnic of Porto, CEOS.PP, Porto, Portugal
 2Porto Accounting and Business School, Polytechnic of Porto, CEOS.PP, UNIAG, APNOR, Porto, Portugal
 3Porto Accounting and Business School, Polytechnic of Porto, Porto, Portugal
 4Higher School Technology and Management, University of Madeira, CiTUR, Funchal, Portugal

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 * Corresponding Author. 

  Corresponding author's ORCID profile: https://orcid.org/0000-0002-2146-9807

 Digital Object Identifier: 

 https://doi.org/10.21833/ijaas.2021.09.003

 Abstract:

Accounting conservatism and Accounting-based Earnings Management Practices (AEMP) introduce bias in financial information (FI), thereby influencing stakeholder behavior in the decision-making process. This study aims to analyze, from the certified accountants’ perspective, the AEMP in Portugal. Specifically, it analyses (1) the development of the AEMP and its impact on FI reporting, (2) the main hampered on its implementation, and (3) the need for the instruments and corporate governance mechanisms to mitigate the AEMP. Besides this research analyses (4) the relationship between the certified accountant’s characteristics (gender, age, professional experience, educational qualifications, and training area. To achieve the proposed objectives, we have used a quantitative methodological approach with a survey questionnaire, conducting an empirical study based on a sample of certified accountants. Based on a sample of 159 certified accountants, the results found that the majority of respondents indicate that Portuguese companies develop AEMP and that these practices have a negative and significant impact on the quality of financial statements (FS). Moreover, most certified accountants point out that is important to adopt measures that will prevent the abuse of AEMP and the main instruments for this are the establishments of more precise and concrete accounting standards and the application of the sanctions. The results also indicate that the audit committee and efficient internal control are corporate governance mechanisms AEMP able of mitigating the effects of the AEMP. Finally, the individual characteristics of certified accountants, such as professional experience, educational qualifications, and training area, significantly influence their perception of the need to mitigate the AEMP. This study presents relevant contributions to theory and practice. First, it develops the literature that evaluates AEMP, particularly in Portugal, where studies are scarce. Second, this study is original because it considers the relationship characteristics of accounting and AEMP professionals. Third, it allows entities that operate in accounting standardization and for accountants and FI users to have a more in-depth knowledge of the AEMP’s instruments and mechanisms. 

 © 2021 The Authors. Published by IASE.

 This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/).

 Keywords: Accounting practices and mechanisms, Accounting standards, Certified accountants, Earnings management

 Article History: Received 2 February 2021, Received in revised form 25 May 2021,  Accepted 27 May 2021

 Acknowledgment 

No Acknowledgment.

 Compliance with ethical standards

 Conflict of interest: The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

 Citation:

 Monteiro AP, Rua OL, and Figueira JC et al. (2021). Practices and mechanisms to mitigate the negative effects of accounting-based earnings management: An empirical study from the professionals’ perspective. International Journal of Advanced and Applied Sciences, 8(9): 15-28

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 Figures

 Fig. 1 Fig. 2 Fig. 3 Fig. 4 Fig. 5 Fig. 6

 Tables

 Table 1 Table 2 Table 3 Table 4 Table 5 Table 6 Table 7 Table 8 

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