Can book–tax differences capture earnings management and tax Management? Empirical evidence from China

Tang, Tanya Y. H.; Firth, Michael

doi:10.1016/j.intacc.2011.04.005

Cited by 132 publications

(170 citation statements)

References 43 publications

Supporting

Mentioning

103

Contrasting

Unclassified

Order By: Relevance

“…Prior researches have begun to investigate the difference between the tax and accounting systems (Lamb et al, 1998;Hoogendoorn, 1996;Nobes & Schwencke, 2006). Considering the recent financial scandals, a large body of literature extends this works by investigating whether the book-tax differences (BTD) provides information about managerial discretion Mills, 1998;Wilson, 2009;Tang & Firth, 2011;Hanlon, 2005). For example, a number of studies link BTD with earnings quality or earnings persistence (Hanlon, 2005;Blaylock et al, 2012), cost of capital (Dhaliwal et al, 2009;Goh et al, 2013), audit fees (Hanlon et al, 2012).…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

The Difference between the Accounting Result and Taxable Income in Detecting Earnings Management and Tax Management: The Tunisian Case

Dridi¹,

Boubaker²

2015

IJBM

View full text Add to dashboard Cite

In this study, we examine empirically whether the gap between the pre-tax income and the taxable income predicts simultaneously earnings management and tax management. Prior researches have begun to estimate several indictors of earnings quality. We extends this works by investigating whether the book-tax differences (BTD) provides information about managerial discretion. BTD can be used as an attribute of information quality and can contain incremental information for investors and users of financial reports of companies We compose a sample of 21 listed Tunisian firms over the 2003-2012 periods, we apply a statistical methodology implementing a linear panel regression. We develop a model in which we estimate abnormal BTD. All earnings and tax management activities are captures by our abnormal BTD indicator (ABTD). From this regression we are going to test the effect of the variables of the earnings and tax management on the ABTD variable. We find, as expected, a significant association between BTD and manager discretion proxies. Our results indicate that BTD contains a predictive power over the earnings and tax management. We find that Tunisian companies are concerned about tax reducing rather than improved information quality and increasing the financial result.

show abstract

Section: Introductionmentioning

confidence: 99%

“…Recent research focus on either BTD are associated with earnings management (Joos et al, 2000;Mills & Newberry, 2001;Donohoe & McGill, 2010;Comprix et al, 2011) or tax planning (Wilson, 2009). Some studies attribute the BTD to both EM and TM (Tang & Firth, 2011;Chen et al, 2012).…”

Section: Introductionmentioning

confidence: 99%

The Difference between the Accounting Result and Taxable Income in Detecting Earnings Management and Tax Management: The Tunisian Case

Dridi¹,

Boubaker²

2015

IJBM

View full text Add to dashboard Cite

show abstract

“…According to Shevlin (2002), Desai and Dharmapala (2006), Plesko (2004), McGill and Outslay (2004), Tang (2005), and Tang and Firth (2010), the BTD estimate is an effective way to identify tax management in companies, because if book earnings are higher than taxable earnings, there is evidence of tax management to reduce the calculation basis of taxes on earnings.…”

Section: Analysis Of Resultsmentioning

confidence: 99%

“…Tax management, tax administration, tax planning, and tax avoidance are defined as a legal way of reducing expenses on taxes, when taxpayers identify opportunities in the laws to decrease companies' tax burden (Armstrong et al, 2011;Desai & Dharmapala, 2006;Formigoni et al, 2009;Minnick & Noga, 2010;Tang & Firth, 2010;Goncharov & Zimmermann, 2005).…”

Section: Aspects Related To Tax Managementmentioning

confidence: 99%

“…It is believed that the increased performance of a company can be reached through tax management, understood as a legal way of reducing expenses on taxes, when taxpayers identify opportunities in laws to decrease companies' tax burden (Goncharov & Zimmermann, 2005;Tang, 2005;Desai & Dharmapala, 2006;Formigoni, Antunes, & Paulo, 2009;Minnick & Noga, 2010;Tang & Firth, 2010).…”

Section: Introductionmentioning

confidence: 99%

See 1 more Smart Citation

Corporate Governance Characteristics as a Stimulus to Tax Management

Gomes

2016

Rev. contab. finanç.

View full text Add to dashboard Cite

This article aimed to investigate whether corporate governance uses tax management to increase companies' performance. The objective was checking whether corporate governance characteristics, such as remuneration paid to the executive board, segregation between Chairman and CEO, and the independence and composition of the Board of Directors, influence tax management in Brazilian companies. At the same time, it aimed to identify whether the preceding tax management is reflected on the subsequent tax management. To do this, a sample of 355 Brazilian companies listed on the BM&FBOVESPA between 2008 and 2014 was used, in order to find out whether their corporate governance characteristics influenced tax management, something identified by calculating ETR, CashETR, and BTD. As a result, it was found (i) that the remuneration paid to executives may be regarded as a characteristic influencing tax management in Brazilian firms, and (ii) that the preceding tax management influences the future tax management. In addition, it was found that Brazilian companies do not rule out tax management benefits, since the average effective rate in the sample under analysis was 25%, and it is statistically lower than the nominal rate of taxes on earnings in Brazil, which is 34%.

show abstract

Book‐Tax Differences, Corporate Governance Effectiveness and Audit Quality: An Interactive Effects

Riguen¹,

Kachouri²,

Jarboui³

2018

J Corp Accounting Finance

View full text Add to dashboard Cite

In this article, we aim to answer the important questions of whether the corporate governance effectiveness affects the relationship between book‐tax differences (BTDs) and audit quality. We also aim to determine whether the variability between BTDs and audit quality is moderated by corporate governance index (CGI). The primary aim of the present study is to contribute to improving the existence of an interaction between BTDs, audit quality, and CGI. This study uses a sample of 28 nonfinancial listed Tunisian companies and covers an eight‐year period from 2005 to 2015. To test the hypotheses of this research, a generalized least squares (GLS) and ordinary least squares (OLS) regression was applied. The results obtained show that, for the Tunisian companies, a positive association between BTDs and audit quality. The current study also provides evidence that corporate governance moderates the relationship between BTDs and audit quality. The findings may be of interest to the academic researchers, practitioners and regulators who are interested in discovering the quality of corporate governance practices and tax practices in Tunisian context. The findings of this study can help Tunisian regulators in creating corporate governance disclosure requirements. The findings also provide the African business community insights concerning audit quality, tax practices, and corporate governance. This article extends the existing literature, by examining the inter‐relationship between corporate governance, BTDs, and audit quality. © 2019 Wiley Periodicals, Inc.

show abstract

Can book–tax differences capture earnings management and tax Management? Empirical evidence from China

Cited by 132 publications

References 43 publications

The Difference between the Accounting Result and Taxable Income in Detecting Earnings Management and Tax Management: The Tunisian Case

The Difference between the Accounting Result and Taxable Income in Detecting Earnings Management and Tax Management: The Tunisian Case

Corporate Governance Characteristics as a Stimulus to Tax Management

Book‐Tax Differences, Corporate Governance Effectiveness and Audit Quality: An Interactive Effects

Contact Info

Product

Resources

About