Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Earnings management by health insurance companies in Brazil

Earnings management by health insurance companies in Brazil This study examines whether Brazilian health insurance companies (HICs) engage in earnings management through discretionary accruals or operational decisions by refraining from reporting a low indicator of sustainability in the market (IDSM).Design/methodology/approachThe study used the Jones and Modified Jones models to identify earnings management through discretionary accruals and used the model described by Roychowdhury to estimate the abnormal behaviors of operational decisions. Data covering 2012 to 2018 were collected from the ANS website.FindingsThe results show that HICs engaged in earnings management to avoid reporting a low IDSM. The findings should help health insurance clients make decisions regarding the purchase or change of health insurance. The findings should also encourage regulators to improve their evaluation of the economic and financial risks around HICs.Originality/valueThe National Agency of Supplementary Health (ANS) established a qualification program for HICs, monitoring them based on a set of indicators. Managers may have an incentive to use earnings management to obtain indices that meet the requirements of the ANS qualification program in order to avoid showing signs of abnormality. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png European Journal of Management and Business Economics Emerald Publishing

Earnings management by health insurance companies in Brazil

Download PDF

Earnings management by health insurance companies in Brazil

Martinez, Antonio Lopo; Carvalho, Flávio Alves de
European Journal of Management and Business Economics , Volume 31 (4): 16 – Sep 21, 2022

Abstract

This study examines whether Brazilian health insurance companies (HICs) engage in earnings management through discretionary accruals or operational decisions by refraining from reporting a low indicator of sustainability in the market (IDSM).Design/methodology/approachThe study used the Jones and Modified Jones models to identify earnings management through discretionary accruals and used the model described by Roychowdhury to estimate the abnormal behaviors of operational decisions. Data covering 2012 to 2018 were collected from the ANS website.FindingsThe results show that HICs engaged in earnings management to avoid reporting a low IDSM. The findings should help health insurance clients make decisions regarding the purchase or change of health insurance. The findings should also encourage regulators to improve their evaluation of the economic and financial risks around HICs.Originality/valueThe National Agency of Supplementary Health (ANS) established a qualification program for HICs, monitoring them based on a set of indicators. Managers may have an incentive to use earnings management to obtain indices that meet the requirements of the ANS qualification program in order to avoid showing signs of abnormality.

Loading next page...
 
/lp/emerald-publishing/earnings-management-by-health-insurance-companies-in-brazil-fzSWuprIzQ
Publisher
Emerald Publishing
Copyright
© Antonio Lopo Martinez and Flávio Alves de Carvalho
ISSN
2444-8451
DOI
10.1108/ejmbe-01-2021-0023
Publisher site
See Article on Publisher Site

Abstract

This study examines whether Brazilian health insurance companies (HICs) engage in earnings management through discretionary accruals or operational decisions by refraining from reporting a low indicator of sustainability in the market (IDSM).Design/methodology/approachThe study used the Jones and Modified Jones models to identify earnings management through discretionary accruals and used the model described by Roychowdhury to estimate the abnormal behaviors of operational decisions. Data covering 2012 to 2018 were collected from the ANS website.FindingsThe results show that HICs engaged in earnings management to avoid reporting a low IDSM. The findings should help health insurance clients make decisions regarding the purchase or change of health insurance. The findings should also encourage regulators to improve their evaluation of the economic and financial risks around HICs.Originality/valueThe National Agency of Supplementary Health (ANS) established a qualification program for HICs, monitoring them based on a set of indicators. Managers may have an incentive to use earnings management to obtain indices that meet the requirements of the ANS qualification program in order to avoid showing signs of abnormality.

Journal

European Journal of Management and Business Economics – Emerald Publishing

Published: Sep 21, 2022

Keywords: Health insurance company; Abnormality; Earnings management; Abnormal behavior; Operational decision

References

  • Earnings management no Brasil: estudo empírico em indústrias e grupos estratégicos
    Almeida, J.E.F.
  • Does it pay to be really good? Addressing the shape of the relationship between social and financial performance
    Barnett, M.L.; Salomon, R.M.
  • Liquidação de operadoras de planos de assistência à saúde no Brasil
    Bragança, C.G.; Pinheiro, L.E.T.; Bressan, V.G.F.; Soares, L.A.d.C.
  • Regulação econômica do setor petrolífero no Brasil: análise das ações da ANP no período de 1997 a 2008
    Campos, A.C.; Camacho, D.T.
  • Regulação econômica e escolhas de práticas contábeis: evidências no mercado de saúde suplementar brasileiro
    Cardoso, R.L.
  • The quality of accruals and earnings: the role of accrual estimation errors
    Dechow, P.M.; Dichev, I.D.
  • Detecting earnings management
    Dechow, P.M.; Sloan, R.G.; Sweeney, A.P.
  • Understanding earnings quality: a review of the proxies, their determinants and their consequences
    Dechow, P.; Ge, W.; Schrand, C.
  • Earnings management in US hospitals
    Dong, G.N.
  • Risk, return, and equilibrium: empirical tests
    Fama, E.F.; MacBeth, J.D.
  • Auditing and earnings management in Brazilian HMOs
    Ferreira, F.R.; Cardoso, R.L.; Martinez, A.L.; Mário, P.D.C.
  • Book-tax differences e gerenciamento de resultados no mercado de ações do Brasil
    Ferreira, F.R.; Martinez, A.L.; Costa, F.M.; Passamani, R.R.
  • Diferença entre o lucro contábil e lucro tributável: uma análise sobre o gerenciamento de resultados contábeis e gerenciamento tributário nas companhias abertas brasileiras
    Formigoni, H.; Antunes, M.T.P.; Paulo, E.
  • Regulatory incentives and financial reporting quality in public healthcare organisations
    Greenwood, M.J.; Baylis, R.M.; Tao, L.
  • Prevendo a insolvência de operadoras de planos de saúde
    Guimarães, A.L.S.; Alves, W.O.
  • A review of the earnings management literature and its implications for standard setting
    Healy, P.M.; Wahlen, J.M.
  • The role of overbilling in hospitals’ earnings management decisions
    Heese, J.
  • Adoção de IRFS e gerenciamento de resultado nas empresas brasileiras de capital aberto
    Joia, R.M.; Nakao, S.H.
  • Earnings management during import relief investigations
    Jones, J.J.
  • Performance matched discretionary accrual measures
    Kothari, S.P.; Leone, A.J.; Wasley, C.E.
  • Creates the national supplementary health agency – ANS and takes other measures
  • Transparência como element fundamental em governo eletrônico: uma abordagem institucional
    Macadar, M.A.; Freitas, J.L.; Moreira, C.R.
  • Abordagem de estudos sobre gerenciamento de resultados: novas perspectivas a partir da análise bibliométrica
    Magro, C.B.D.; Lavarda, C.E.F.; Klann, R.C.
  • Gerenciamento de resultados no Brasil: um survey da literatura
    Martinez, A.L.
  • Gerenciamento da informação contábil no Brasil mediante decisões operacionais
    Martinez, A.L.; Cardoso, R.L.
  • Statutory insolvency regulations and earnings management in the prepaid health-care industry
    Mensah, Y.M.; Considine, J.M.; Oakes, L.
  • Manipulação das informações contábeis: uma análise teórica e empírica sobre os modelos operacionais de detecção de gerenciamento de resultados
    Paulo, E.
  • Ciclos econômicos e estratégias de gerenciamento de resultados contábeis: um estudo nas companhias abertas brasileiras
    Paulo, E.; Mota, R.H.G.
  • Efeitos da regulação econômico-financeira nas estratégias de financiamento das operadoras de plano de saúde
    Pinheiro, I.C.B.; Peleias, I.R.; Silva, A.F.; Martins, E.
  • Publicidade e transparência das contas públicas: obrigatoriedade e abrangências desses princípios na administração pública Brasileira
    Platt, O.A.; Neto; Cruz, F.; Ensslin, S.R.; Ensslin, L.
  • Earnings management through real activities manipulation
    Roychowdhury, S.
  • A Agência Nacional de Saúde Suplementar—ANS: onze anos de regulação dos planos de saúde
    Salvatori, R.C.; Ventura, C.A.A.
  • Análise das intervenções da Agência Nacional de Saúde Suplementar (ANS) através dos Índices de Desempenho da Saúde Suplementar (IDSS)
    Sancovschi, M.; Macedo, M.A.S.; Silva, J.A.
  • Avaliação de agências reguladoras: uma agenda desafios para a sociedade Brasileira
    Silva, D.L.; Ávila, J.P.C.; Campos, A.M.
  • Positive accounting theory: a ten year perspective
    Watts, R.L.; Zimmerman, J.L.
  • Evidence on the trade-off between real activities manipulation and accrual-based earning management
    Zang, A.Y.