Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5107089 | Journal of International Accounting, Auditing and Taxation | 2017 | 38 Pages |
Abstract
This study explores the link between earnings management and jurisdictional differences in book-tax conformity. A dataset of national reforms lowering the corporate tax rate is used to estimate the effect of conformity on private firm's earnings management behavior when a specific incentive to manage earnings downward exists. Total and discretionary accruals are used to measure earnings management and a continuous measure is used to assess the level of book-tax conformity. Results suggest that changes in the statutory tax rate affect firms in jurisdictions with high book-tax conformity more than firms in jurisdictions with less book-tax conformity. However, more overall earnings management is attributed to firms in low conformity jurisdictions. These findings contribute to the ongoing debate on the appropriate level of book-tax conformity.
Related Topics
Social Sciences and Humanities
Business, Management and Accounting
Accounting
Authors
Dennis Sundvik,