Big Bath Accounting in an Emerging Market: Evidence from Newly Appointed CEOs in Brazil

This study examines the prevalence of big bath accounting in an emerging market context, focusing on newly appointed CEOs Brazilian firms. We find evidence Brazil and extends CEO turnover literature by documenting a limit to downward earnings manipulation using as source study. Our results suggest that incumbent have incentives manage profits only when company was previously profitable, rather than risking worsening already bad situation, case unprofitable also they are more likely use accrual management, reducing production or increasing discretionary expenditures, tool decrease level. Overall, our fills gap supports future research understanding scenario