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Avoidance motivation earnings management and its influencing factors

Author: XingXing
Tutor: WangDingXun
School: Henan University of Economics and Law
Course: Accounting
Keywords: Avoidance motivation earnings management Nature of ownership Board Independence Control of major shareholders
CLC: F224
Type: Master's thesis
Year: 2011
Downloads: 125
Quote: 0
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Abstract

Reduce tax costs is an important motivation for the company to manage earnings, the existing literature mainly from the three aspects of the company tax avoidance action due to earnings management: First, tax avoidance by the research company inventory policy choice Investigation company earnings management Motives conclusions prove that the tax burden on savings is an important reason companies choose the LIFO; Second, the research firm will profit adjusted by the use of accounting - tax differences reduce the tax burden, for such studies, existing research conclusions unified, the company adjusted by accounting profits will take full advantage of the tax - accounting differences reduce the tax burden; Third, the research company tax rate change, the company exists to advance or retard the profits to reduce the tax burden of earnings management behavior. Foreign scholars around the United States for the third aspect of the research, the background of the 1986 tax reform, research firm lowered the rate of earnings management behavior. The study concluded that the company will be postponed in order to maximize value profits and minimize tax costs; same time, the company during the tax avoidance motive manipulation of earnings management, there are tax costs and trade-offs of financial reporting costs. The company's tax avoidance motive earnings management by the political cost drivers, the debt covenants move due and compensation contracts motivation earnings management behavior and constraints. Problem for the third category, the empirical research is still rare, China's listed companies in the tax rate change, the existence of tax avoidance motives earnings management behavior? Company tax avoidance motives earnings management will be the impact of those factors and constraints? These issues The research will further validate our tax avoidance motivation earnings management behavior, not only enrich our tax avoidance action due to earnings management literature, and at the same time also have policy significance of China's tax system reform. 2008 income tax reform will reduce the statutory tax rate of corporate income tax from 33% to 25% of earnings management has provided an opportunity for the study of China's listed companies avoidance move. According to the theoretical analysis of China's listed companies also exists in order to maximize the value in the year before the tax rate down to defer income to enjoy a preferential tax rate of earnings management behavior; same time, the company's avoidance earnings management will be subject to a number of factors and constraints. Based on our unique institutional background, reduce the tax burden on earnings management behavior factors and the existing foreign research results will differ. First of all, the ownership of the different nature of listed companies in the pursuit of the interests of the target, whether this difference be the impact of tax avoidance action due to earnings management behavior?, Whether different corporate governance mechanisms affect the company's tax avoidance move due to earnings management behavior? Whether independent directors will play a supervisory role, influence and restrict the company's management, earnings management behavior? controlling shareholder will choose to give to defer profits enjoy tax incentives in order to obtain the private benefits of control, thus affecting profits deferred earnings management behavior? Based on the above problem, this paper years of tax reform as research background, research tax rates change when the company's tax avoidance motive earnings management behavior. This article will use the the manipulative operating the accruals variable as a measure of corporate tax avoidance action because of the earnings management behavior variables, empirical test supplemented by theoretical analysis based on the data of China's Shanghai and Shenzhen A-share listed companies, to explore the answers to these questions. In this paper, an empirical test, the following conclusions: (1) in the lower tax rate of the previous year, the company deferred profit earnings management behavior compared to non-state-owned companies and state-owned companies more likely to be deferred profit earnings management; (2 low proportion of independent directors of the company are more possible) in the first year of the tax rate down, the profit deferred earnings management; (3) in the first year of the tax rate down, the controlling shareholder stake in the company is more likely to profit surplus deferred management. This study verify the change in tax rates, tax avoidance action due to earnings management provides evidence to provide a basis to explain earnings management behavior, to expand earnings management research has certain referential significance.

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