Earnings management and investment efficiency

Abstract Purpose: To verify the relationship between the quality of the accounting information, measured by earnings management, and the efficiency of investments made by Brazilian companies listed on the BM&FBovespa. Design/methodology/approach: Firstly, the investment efficiency benchmark was established, analyzing the level of investment and the growth in sales as shown in equation (1). After this classification, the results of the extreme quartiles, which were classified as over/under investment, were used as dependent variables to analyze the relationship between income and investment management above or below predictable levels. Finally, to test this relationship, a multinomial logistic regression was used to evaluate the probability of over and under investments in companies that practice earnings management, compared to the benchmark. The sample that served as the basis for this study is composed of all the publicly-held companies that had or still have shares listed on the BM&FBOVESPA, covering the period from 1996 to 2012. Findings: The data analysis revealed empirical evidence that earnings management is positively related to levels investment and this can interfere in the probability of a company being classified as under or over investing. Therefore, based on the results found, it is confirmed that “the higher the level of earnings management, the greater the probability of the company deviating from the ideal level of investment.” Originality/value: The results were consistent with the idea that the quality of accounting information plays a relevant role for managers in order to analyze the efficiency of investments.

摘要

## 研究目的
本研究旨在验证以盈余管理（earnings management）衡量的会计信息质量，与在巴西BM&FBovespa上市的巴西公司的投资效率之间的关联。

## 研究设计与方法
首先，通过分析式（1）中的投资水平与销售增长率，确立投资效率基准。完成上述分类后，将被划分为过度投资/投资不足的极端四分位数结果作为因变量，分析盈余管理与偏离预期水平的投资（过度或不足投资）之间的关联。最后，为检验该关联，采用多项逻辑回归（multinomial logistic regression），对比基准组，评估实施盈余管理的公司出现过度投资与投资不足的概率。本研究的样本涵盖1996年至2012年间所有曾在或仍在BM&FBovespa上市的公众公司。

## 研究发现
数据分析结果提供经验证据表明，盈余管理与投资水平呈正相关关系，且这一关联会影响公司被归类为投资不足或过度投资的概率。据此，本研究证实了"盈余管理水平越高，公司偏离理想投资水平的概率越高"这一结论。

## 原创性与价值
本研究结果印证了会计信息质量对管理层分析投资效率具有重要作用这一观点。