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Fiscal support and earnings management
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He, Guanming (2016) Fiscal support and earnings management. The International Journal of Accounting , 51 (1). pp. 57-84. ISSN 1094-4060 .
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WRAP-He-Fiscal-support-and-earnings-management-Accepted-2016.pdf - Accepted Version - Requires a PDF viewer. Download (1195Kb) | Preview |
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WRAP_He_Acceptance_1273362-wbs-190815-ms-14-11-605_final_lta.pdf - Accepted Version Embargoed item. Restricted access to Repository staff only - Requires a PDF viewer. Download (234Kb) |
Official URL: https://doi.org/10.1016/j.intacc.2016.01.009
Abstract
It is well documented in the literature that firms tend to manipulate earnings before IPO (initial public offerings) and SEO (seasoned equity offerings). This study contributes to the literature by providing the first evidence on whether and how fiscal support in the form of preferential tax treatment and financial subsidy affects a firm’s earnings management behaviors. Using data from Chinese firms that conduct IPO and SEO, I find that firms have a lower level of earnings management prior to the offerings if they enjoy more income tax savings attributed to preferential tax treatments or enjoy more financial subsidies from local governments. My results are consistent with the view that firms that receive stronger fiscal support have smaller demand for earnings management which is a costly tool for a firm to achieve its desired earnings targets.
Item Type: | Journal Article | ||||||||
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Divisions: | Faculty of Social Sciences > Warwick Business School > Accounting Faculty of Social Sciences > Warwick Business School |
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Journal or Publication Title: | The International Journal of Accounting | ||||||||
Publisher: | Elsevier | ||||||||
ISSN: | 1094-4060 | ||||||||
Official Date: | March 2016 | ||||||||
Dates: |
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Volume: | 51 | ||||||||
Number: | 1 | ||||||||
Page Range: | pp. 57-84 | ||||||||
Status: | Peer Reviewed | ||||||||
Publication Status: | Published | ||||||||
Access rights to Published version: | Restricted or Subscription Access | ||||||||
Date of first compliant deposit: | 5 June 2017 | ||||||||
Date of first compliant Open Access: | 31 March 2018 | ||||||||
Open Access Version: |
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