Research On The Influence Of Book-tax Difference On Firm Risk

Because of the moderate separation mode of accounting standards and income tax law in China,the differences between accounting profit and tax income are called book-tax difference.As there are differences between the accounting standards and the enterprise income tax law,managers have more spaces for earnings management and tax avoidance,which leads to further expansion of book-tax differences.This thesis reviews the related researches on book-tax differences at home and abroad firstly.Combined the principal-agent theory,effective market theory,and information asymmetry theory,it separates book-tax differences into total book-tax differences(BTD),normal book-tax differences(NBTD),abnormal book-tax differences(ABTD),temporary book-tax differences(TBTD)and permanent book-tax differences(PBTD).After that,the thesis makes theoretical analysis of relationships between BTD,NBTD,ABTD,TBTD,PBTD and firm risk.On the basis of previous researches,this thesis further improves the measurement model of NBTD and ABTD.In addition,selecting financial data of Chinese list companies from 2008 to 2015,empirical models are respectively constructed to verify hypotheses.According to empirical results,BTD,NBTD,ABTD,TBTD and PBTD are positive related to firm risk.Thus we can conclude that BTD,NBTD,ABTD,TBTD and PBTD are effectively to measure firm risk.Besides,information asymmetry exists and misleads investors to incorrect investment decisions.Finally,based on the results of empirical research,this paper provides suggestions to regulators and researchers for future research proposals.One hand,lawmakers should coordinate the relationship between accounting standards and tax laws.On the other hand,they should strengthen the supervision of information disclosure and constantly improve the tax information disclosure of listed companies in china.In order to improve the efficiency of investment,investors should learn more about financial management and sharpen expertise.