Impacts on the Recognition of Deferred Tax Assets in Financial Institutions: A Study of the Largest Brazilian Banks from the Period 2013 To 2017

Abstract

Objective: The objective of this study is to understand the impacts on the recognition of deferred tax assets for earnings management in financial institutions that operate in the Brazilian market between 2013 and 2017. It is known that the recognition of deferred tax assets can contribute to the increase in net profit, for its distribution to shareholders and reduction of the variability of results. Methods: Qualitative and quantitative approaches, documentary and descriptive research, comparative study of the results of deferred tax assets of five Brazilian financial institutions through consolidated financial statements were used. The analysis of the period was divided into three moments: 1) pre-crisis: between 2013 and 2014; 2) strong crisis: 2015 and 2016; 3) post-crisis: in 2017. Results: With this, it was possible to find the following: a) greater constitution of assets of private banks in 2015; b) continuous growth in the constitution of bad debt provisions in 2015; c) less constitution of deferred tax assets in 2017. It is concluded that deferred tax assets are an important fiscal device in periods of financial crisis, where for all banks analyzed, deferred tax assets represented on average 83% of net income Institutions in 2015, a fact that did not occur in pre-economic crisis periods. Justifications/contributions: The study is justified by the lack of academic references on the topic and to contribute as an analysis tool to professionals and organizations in the area, especially when it comes to analyzing different scenarios of economic impact on the sector.