Likely, possible or remote? A study about tax contingencies of Brazilian banks
Purpose: Aims to identify the determining factors to tax provisions and contingent tax liabilities classification by Brazilian financial institutions. The tax nature was chosen due to the representativeness of these contingencies. Financial institutions were listed according to the scarcit...
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| Principais autores: | , , |
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| Formato: | Online |
| Idioma: | por |
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Portal de Periódicos Eletrônicos da UFRN
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| Endereço do item: | https://periodicos.ufrn.br/ambiente/article/view/18364 |
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| Resumo: | Purpose: Aims to identify the determining factors to tax provisions and contingent tax liabilities classification by Brazilian financial institutions. The tax nature was chosen due to the representativeness of these contingencies. Financial institutions were listed according to the scarcity of similar research.
Methodology: In order to analyze the determinant factors to the provisions and contingencies classification, it was used a logistic regression model. The analyzed companies belong to Brasil, Bolsa, Balcão (B3) and the period analyzed is 2016’s financial year.
Results: The average of process in which financial institutions are defendants has 5 years of commencement and the relative process value (ratio between the amount of the lawsuit and the company's assets) represents an average of 0.4%. The results of the study support Ribeiro (2012), since there is divergence of opinions beetween the legislation’s interpretation and the determination of loss’ probability, as presents itself as a feasible practice of earnings management. The results also support Hennes (2014) that observed the insufficiency of quantitative disclosures to determine the loss expectations as support Aharony and Dotan (2004) that demonstrated the lower conservatism of managers and auditors when compared to financial analysts. In the same vein similar studies and the Positive Accounting Theory, this study concludes that the discretionarity provided to managers can contribute to information management, enabling its use for informational or opportunistic purposes.
Contributions of the Study: The contribution of this study is to elucidate questions related to the elements that guide the criteria to provisions and contingent liabilities’ classifications used by managers. Thus, it contributes by highlighting as characteristics related to the processes (administrative or judicial sphere), the instance, its value and its term of conduct may influence on the classification as probable, possible or remote. |
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