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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.
Original language | English |
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Peer-reviewed scientific journal | Journal of International Accounting, Auditing and Taxation |
Volume | 28 |
Pages (from-to) | 31-42 |
Number of pages | 12 |
ISSN | 1061-9518 |
DOIs | |
Publication status | Published - 03.01.2017 |
MoE publication type | A1 Journal article - refereed |
Keywords
- 512 Business and Management
- Earnings management
- Tax incentive
- Tax reform
- Private firms
- Book-tax conformity
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Dive into the research topics of 'Book-tax conformity and earnings management in response to tax rate cuts'. Together they form a unique fingerprint.Activities
- 2 Organisation of / participation in conferences, workshops, courses, seminars
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The 51st Annual Conference of the British Accounting & Finance Association
Sundvik, D. (Speaker: Presenter)
23.03.2015 → 25.03.2015Activity: Participating in or organising an event › Organisation of / participation in conferences, workshops, courses, seminars
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The 2014 Annual Doctoral Conference of the British Accounting & Finance Association
Sundvik, D. (Speaker: Presenter)
13.04.2014 → 14.04.2014Activity: Participating in or organising an event › Organisation of / participation in conferences, workshops, courses, seminars