EARNING MANAGEMENT IN THE LIGHT OF DIFFERENCES BETWEEN ACCOUNTING AND INCOME TAX (BOOK-TAX DIFFERENCES): AN ANALYSIS OF DATA ON BALANCED PANEL
DOI:
https://doi.org/10.21680/2176-9036.2016v8n1ID6532Abstract
This article aims to analyze the influence of tax practices as incentives for earnings management in Brazilian companies. The sample consisted of publicly traded companies that have shares traded on the BM&FBovespa making the period 1999 to 2012. To operationalize the study, estimates were generated for both the model modified Jones (1995) in order to obtain discretionary accruals, as for the model developed by Tang (2006) modified in order to capture the abnormal part on the misalignment between accounting and tax rules in determining the book profit and tax profit (Book-Tax Differences). The results revealed that the tax practices adopted by companies, influenced the overall earnings management practiced by managers, and this negative relationship. In light of this fact, the market realizes that the greater alignment between the ways of determining the accounting and tax profit deteriorates the reliability of accounting numbers reported by companies.
Keywords: Management of financial results. Book-Tax Differences. Tax profit.
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