PROVISIONS AND CONTINGENT LIABILITIES: CHARACTERISTICS AND RECONFIGURATION OF THE FINANCIAL STATEMENTS OF PUBLICLY TRADED BRAZILIAN COMPANIES

Abstract

The standardization of provisions and contingent liabilities is essential to inhibit information asymmetry and seek its reliability. Provisions and contingent liabilities have been the focus of news in the market and have the attention of researchers who seek to understand how managers make decisions about these processes that justify their classifications. This article aims to analyze the characteristics of provisions and contingent liabilities and the reflex of the reconfiguration of contingencies in Brazilian public companies listed in Brazil, Over The-Counter (B3). In order to achieve the objective, a comprehensive analysis was carried out that contemplated the characteristics, the changes in the chance of losing the processes and the reconfiguration of the classifications. Through the analysis of the reference forms from 2010 to 2019, 8,302 processes were found. Civil and tax lawsuits have a higher number than the other classifications. There were 1,145 changes in the chance of loss, the largest amount of change in the chance of loss was for the possible classification, totaling 402 changes, and the largest amount of change in the chance of loss from one classification to another is carried out from possible to remote, totaling 233 changes. With the reclassification of contingent liabilities to provisions, many of the companies analyzed would suffer losses. It was concluded, based on the difference in means test, that the reclassification of contingencies would have a major impact on the results of companies, which indicates that companies must carefully demonstrate the risks to which they are subject.