Earnings Management And Income Tax Burden

Earnings management is the important issue of financial accounting. It isbecause of the lack of research on this issue in domestic, therefore, the authorsystematic analyze the widely adopted manners of earnings management of listedcompanies in China, and mainly linked accrued item earnings management andincome tax burden. This paper is based on the perspective of the differences betweenaccounting profit and taxable income, depth discussed the relationship between eachother.Under the appropriate separation mode of China’s Accounting Standards andIncome Tax Law, the differences between China’s tax regulations and accountingsystem are increasing, and provide space to manipulate earnings to the enterprisemanagement authorities. This paper is based on the perspective of the differencesbetween accounting profit and taxable income, that is, non-taxable items profit andloss, analyze the relationship between accrued item earnings management andincome tax burden. The results show that when the listed companies manageearnings through accrued items, with the company improve the magnitude ofearnings management and reduce the applicable tax rate, the manipulation ofnon-taxable items profit and loss is also reduced. This illustrate that companies canenhance the effect of accrued item earnings management by reducing themanipulation of non-taxable items profit and loss; Raising the magnitude of earningsmanagement, the income tax burden of the listed companies is increasing. Thus, theresults of the manipulation of accrued item earnings management is likely associatedwith this result to improve the income tax burden of the listed companies. Inconclusion, companies enhance the accrued item earnings management by reducingthe manipulation of non-taxable items profit and loss, but this result will draw toimprove the income tax burden of the listed companies. According to the research issues, this article is divided into four parts foranalysis and demonstration, each part is organized as follows:The first part is an introduction to clarify the background, the goal, the meaning,the main content and method of the research, as well as the main contributions andlimitations.The second part includes the first chapter and second chapter, review andcomment on research at domestic and international. This part briefly described therelated concepts and theories of earnings management, income tax burden as well asthe differences between accounting profit and taxable income. It is the basis of thesubsequent sections for data analysis.The third part consists of chapter three, the fourth and fifth chapter. It is the partof the empirical research and does an empirical test to obtain the results.The fourth part is the conclusion of this paper on the basis of theoreticalanalysis and empirical research, and provides policy recommendations for marketregulators，and also propose measures to curb earnings management.