Resumen

CORNEJO-SAAVEDRA, Edinson; ARIAS-MUNOZ, Paz; AMESTICA-RIVAS, Luis  y  GUINEZ-CABRERA, Nataly. Earning Management Practices in the Chilean Retail Sector. The La Polar Case. Cuad. Contab. [online]. 2017, vol.18, n.45, pp.22-39. ISSN 0123-1472.  https://doi.org/10.11144/javeriana.cc18-45.pems.

Earnings management practices occur when a firm uses discretion in the preparation of its financial statements and in the structuring of its transactions as to alter the reported benefits and mislead the stakeholders interested in the performance of the company. Accounting fraud is the extreme form of this type of practice. This study analyzed the effects of an extreme practice of earnings management -the unilateral renegotiation of non-performing loans- in the financial statements and performance indicators of La Polar; and evaluated the effect of the disclosure of such practices on the stock returns of the firm and the Chilean retail sector. It was concluded that renegotiation accounting improved the appearance of the financial statements and indicators of the firm and that, once this situation was revealed, the market punished the price of the shares of La Polar and also of the other retail companies, given the suspicion that these also carried out unrevealed renegotiations in their financial statements.

Palabras clave : Earnings management; provisions for uncollectible debts; unilateral renegotiations; fraud; retail.

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