Earnings persistence in Brazilian football clubs
Keywords:
Brazilian Football Clubs, Earnings Persistence, Earnings Predictability, Earnings QualityAbstract
This paper examines the earnings quality of Brazilian football clubs, focusing on earnings persistence, its relationship with club size, and the persistence of accruals and cash flow. Based on the 2020 ranking by the Brazilian Football Confederation, the sample comprises 23 teams that disclosed financial statements from 2011 to 2021. Results indicate that smaller clubs demonstrate higher earnings persistence and predictability compared to larger counterparts. Specifically, the cash flow component of earnings exhibits stronger persistence in predicting future earnings than accruals among smaller clubs. Furthermore, findings suggest enhanced earnings predictability and persistence following the implementation of regulations such as PROFUT, which restricts expenses and debts. This study underscores earnings persistence as a critical indicator of earnings quality, particularly significant in the current regulatory landscape where Brazilian clubs can opt for incorporation under the Soccer Limited Company Law (2021).
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