The Relationship between Alternative Minimum Tax and Earnings Management

• Main Authors: Tzu-Ching Wang, 王姿晴
• Other Authors: Hung-Shu Fan
• Format: Others
• Language: zh-TW
• Published: 2008
• Online Access: http://ndltd.ncl.edu.tw/handle/27052226079305458086

碩士 === 輔仁大學 === 會計學系碩士班 === 96 === The Alternative Minimum Tax (hereafter, AMT) was implemented in 2006 in Taiwan. Since the AMT may induce some profitable companies to manage discretionary accruals for alleviating their tax burden, this study is aimed at examining the impact of AMT on relation between listed firms’ earnings management and corporation tax. The sample consists of 1,315 listed companies in 2006. This study use cross-sectional Modified Jones model to compute the discretionary accruals, which are used to proxy firms’ earnings management behavior. The empirical results are summarized as follows: 1. The discretionary accruals are significantly positive-related with corporate income tax. This evidence shows that listed firms are actively reduce their discretionary accruals to lower their income tax. 2. Compared to the not-AMT firms, the AMT firms tend to more actively reduce their discretionary accruals to lower their income tax. These empirical results remain unchanged in various robustness tests.