SHARE REPURCHASE AND EARNINGS MANAGEMENT PRACTICES: AN EMPIRICAL STUDY ON THE COMPANIES LISTED ON THE BM&FBOVESPA

This research aimed to verify if Brazilian companies that bought back shares between the periods of 2011 to 2015, managed their smaller accounting numbers in the period before the use of the repurchase tool, and also, if this group of companies obtained later abnormal gains the repurchase of shares, the result of the reversal of discretionary accruals (earnings management proxy). As a research methodology, the Jones Modified and Performance Matching econometric models were used to generate discretionary accruals. In order to find the abnormal return, the difference between the real return (closing return) and the expected return (CAPM model) was calculated. The results of the research indicated that there is evidence that companies use the management of results to reduce profits in moments before the buyback of shares, in order to obtain abnormal gains in the later periods, which is evidenced by a greater abnormal return after repurchase, between companies that supposedly managed their smaller numbers, prior to the buyback, considering the Performance Matching model for detecting discretionary accruals.