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<p style="text-align:justify;">This&nbsp;study investigates the factors that&nbsp;Brazilian companies use to manage their&nbsp;defined benefit plans,&nbsp;specifically the determinants of the three financial&nbsp;actuarial&nbsp;assumptions: discount rate, expected return on assets and&nbsp;compensation growth&nbsp;rate. The focus of this research is the companies listed&nbsp;on the B3 – Brazilian&nbsp;Stock Exchange -&nbsp;that&nbsp;&nbsp;recognized and&nbsp;disclosed, from 2010 to 2017, post-employment benefit characterized as Defined&nbsp;Benefit (DB). The sample containing 296 firm/year&nbsp;was divided into two&nbsp;subgroups considering the firm’s political&nbsp;connections. The results suggest&nbsp;that politically connected companies are&nbsp;less effective in managing the&nbsp;solvency of funds or,&nbsp;according to&nbsp;Kido, Petacchi and Weber&nbsp;(2012)&nbsp;act&nbsp;intentionally to justify the&nbsp;company's financial stress. The year before the&nbsp;elections proved to be the&nbsp;most&nbsp; relevant period of discretion, while the&nbsp;specific year of the&nbsp;electoral election only influences the determination of&nbsp;the actuarial&nbsp;financial premises in politically connected companies and, just&nbsp;like in&nbsp;Naughton, Petacchi and Weber&nbsp;(2015)&nbsp;the manager acts to improve the solvency&nbsp;(reduce the deficit)&nbsp;of the pension fund in these periods. The hypothesis that&nbsp;politically&nbsp;connected companies have an incremental adjustment in&nbsp;actuarial&nbsp;assumptions in electoral years has shown results consistent with&nbsp;the theory&nbsp;suggesting that this group of companies manages the reduction&nbsp;of the actuarial&nbsp;deficit in election times more incisively</p>

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Original Research 

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Financial Actuarial Assumptions: Empirical Study of How Brazilian Companies Manage Their Defined Benefit Plans

<p style="text-align:justify;">The&nbsp;objective of the present study was to raise the cases of restatements and to&nbsp;evaluate whether these events were associated with the low earnings quality and&nbsp;with the provision of advice with a qualified opinion by audit firms. The&nbsp;results obtained with the analysis indicate that the low earnings quality&nbsp;increases the chances of republishing the financial statements. Additionally,&nbsp;the results indicate that there is no evidence that lower earnings quality&nbsp;increases the chances of issuing a qualified audit report or disapproval of the&nbsp;financial statements by the independent auditors. These results point to a&nbsp;divergence regarding the understanding of earnings quality by the auditors and by the regulatory agency.</p>

The Influence of Earnings Quality for Restatements and Auditor’s Qualified Opinion

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