Book-tax conformity, earnings persistence and the association between earnings and future cash flows

• 成果类型: Article
• 署名作者: Atwood, T. J.; Drake, Michael S.; Myers, Linda A.
• 署名单位: University of Arkansas System; University of Arkansas Fayetteville; State University System of Florida; Florida State University; University System of Ohio; Ohio State University
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2009.11.001
• 发表日期: 2010
• 关键词: information-content; income; performance; accruals; COSTS

摘要

Calls for eliminating differences between accounting earnings and taxable income in the US have been debated extensively. Proponents of increased book-tax conformity argue that tax compliance will increase and earnings quality will improve. Opponents argue that earnings quality will decline. We examine whether the level of required book-tax conformity affects earnings persistence and the association between earnings and future cash flows. We develop a comprehensive book-tax conformity measure and find that earnings have lower persistence and a lower association with future cash flows when conformity is higher. Our evidence suggests that increased book-tax conformity may reduce earnings quality. Published by Elsevier B.V.