The detection of earnings management through a decrease of corporate income tax

Abstract This paper explores the manner in which Dutch and German listed companies were able to manage earnings by the decline in corporate income tax toward the end of the 2000s. In addition, a recent article examines the existing state of earnings management at a European level in the Netherlands...

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Autor principal:	Kawa Wali
Formato:	article
Lenguaje:	EN
Publicado:	SpringerOpen 2021
Materias:	Corporate income tax Earnings management Discretionary accruals Tax cycle Tax savings Business HF5001-6182 Finance HG1-9999
Acceso en línea:	https://doaj.org/article/b6f96d5a999d4f3280f44925609278c3
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spelling	oai:doaj.org-article:b6f96d5a999d4f3280f44925609278c32021-11-07T12:15:01ZThe detection of earnings management through a decrease of corporate income tax10.1186/s43093-021-00083-82314-7210https://doaj.org/article/b6f96d5a999d4f3280f44925609278c32021-11-01T00:00:00Zhttps://doi.org/10.1186/s43093-021-00083-8https://doaj.org/toc/2314-7210Abstract This paper explores the manner in which Dutch and German listed companies were able to manage earnings by the decline in corporate income tax toward the end of the 2000s. In addition, a recent article examines the existing state of earnings management at a European level in the Netherlands and Germany. This empirical study sampled 1350 firm-years for the Netherlands and 1850 firm-years for Germany between 2000 and 2018. The study indicated that those firms with larger prospect tax savings appeared to exercise earnings management to hasten discretionary accruals. In view of the income-reducing impact these discretionary deductions have on financial statements, the findings show corporate income taxes are a significant incentive. Since companies can reduce tax costs by deferring income tax to a subsequent year and lower the tax tariff cycle, theoretically, this tax reform incentivizes management to manage their earnings with the purpose of minimize tax payments. More research is needed into the impact of tax compliance on declining earnings management in this area.Kawa WaliSpringerOpenarticleCorporate income taxEarnings managementDiscretionary accrualsTax cycleTax savingsBusinessHF5001-6182FinanceHG1-9999ENFuture Business Journal, Vol 7, Iss 1, Pp 1-12 (2021)
institution	DOAJ
collection	DOAJ
language	EN
topic	Corporate income tax Earnings management Discretionary accruals Tax cycle Tax savings Business HF5001-6182 Finance HG1-9999
spellingShingle	Corporate income tax Earnings management Discretionary accruals Tax cycle Tax savings Business HF5001-6182 Finance HG1-9999 Kawa Wali The detection of earnings management through a decrease of corporate income tax
description	Abstract This paper explores the manner in which Dutch and German listed companies were able to manage earnings by the decline in corporate income tax toward the end of the 2000s. In addition, a recent article examines the existing state of earnings management at a European level in the Netherlands and Germany. This empirical study sampled 1350 firm-years for the Netherlands and 1850 firm-years for Germany between 2000 and 2018. The study indicated that those firms with larger prospect tax savings appeared to exercise earnings management to hasten discretionary accruals. In view of the income-reducing impact these discretionary deductions have on financial statements, the findings show corporate income taxes are a significant incentive. Since companies can reduce tax costs by deferring income tax to a subsequent year and lower the tax tariff cycle, theoretically, this tax reform incentivizes management to manage their earnings with the purpose of minimize tax payments. More research is needed into the impact of tax compliance on declining earnings management in this area.
format	article
author	Kawa Wali
author_facet	Kawa Wali
author_sort	Kawa Wali
title	The detection of earnings management through a decrease of corporate income tax
title_short	The detection of earnings management through a decrease of corporate income tax
title_full	The detection of earnings management through a decrease of corporate income tax
title_fullStr	The detection of earnings management through a decrease of corporate income tax
title_full_unstemmed	The detection of earnings management through a decrease of corporate income tax
title_sort	detection of earnings management through a decrease of corporate income tax
publisher	SpringerOpen
publishDate	2021
url	https://doaj.org/article/b6f96d5a999d4f3280f44925609278c3
work_keys_str_mv	AT kawawali thedetectionofearningsmanagementthroughadecreaseofcorporateincometax AT kawawali detectionofearningsmanagementthroughadecreaseofcorporateincometax
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The detection of earnings management through a decrease of corporate income tax

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