Earnings Management Strategies and the Trade-Off between Tax Benefits and Detection Risk: To Conform or Not to Conform?
成果类型：
Article
署名作者：
Badertscher, Brad A.; Phillips, John D.; Pincus, Morton; Rego, Sonja Olhoft
署名单位：
University of Notre Dame; University of Connecticut; University of California System; University of California Irvine; University of Iowa
刊物名称：
ACCOUNTING REVIEW
ISSN/ISSBN：
0001-4826
DOI：
10.2308/accr.2009.84.1.63
发表日期：
2009
页码：
63-97
关键词：
摘要：
Prior research has separately examined pretax earnings management activities that have current taxable income consequences (book-tax conforming earnings management) and those that do not have current taxable income consequences (book-tax nonconforming earnings management). Our study documents the prevalence of, and then investigates the firm-specific characteristics that impact the choice between, these earnings management strategies. We utilize a sample of firms that restated their earnings downward due to accounting irregularities and thus can be presumed to have managed earnings upward. We find that nonconforming earnings management is more prevalent and that firms trade off the net present value of tax benefits against the net expected detection costs associated with nonconforming earnings management. In particular, firms having NOL carryforwards, using a high-quality auditor, or engaging in the most egregious misstatements rely less on nonconforming earnings management strategies. We also find that book-tax differences are useful in predicting restatements.