The association between book-tax conformity and earnings management

• 成果类型: Article
• 署名作者: Blaylock, Bradley; Gaertner, Fabio; Shevlin, Terry
• 署名单位: Oklahoma State University System; Oklahoma State University - Stillwater; University of Wisconsin System; University of Wisconsin Madison; University of California System; University of California Irvine
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-014-9291-x
• 发表日期: 2015
• 页码: 141-172
• 关键词: accounting measures; VALUE RELEVANCE; income; Aggressiveness; performance; IMPACT; COSTS; WILL

摘要

There is an ongoing debate in the literature about the costs and benefits of conforming book and taxable income. Proponents argue that increased book-tax conformity will reduce aggressive financial reporting: managing earnings up increases taxes and will curtail abusive tax shelters because managing taxes down decreases earnings reported to shareholders. We use a panel of 139,536 firm-year observations across 34 countries over the period 1996-2007 to test whether high levels of book-tax conformity are associated with less earnings management. We find that higher book-tax conformity is associated with significantly more, not less, earnings management. We conclude that one of the primary claimed benefits of increasing book-tax conformity, more truthful financial reporting with less earnings management, is unlikely to be as large as previously thought.