The Influence of the Reduction of Corporate Tax Rate on Undistributed Earnings

• Main Authors: Ming-Zheng Li, 李明正
• Other Authors: Lee-Wen Yang
• Format: Others
• Language: zh-TW
• Published: 2016
• Online Access: http://ndltd.ncl.edu.tw/handle/73108548587962371298

碩士 === 朝陽科技大學 === 會計系 === 104 === This study used a sample of listed companies in Taiwan’s industry during 1991~2013 to investigate whether the reduction of Corporate Income Tax from 25% to 17%, starting in 2010, has affected companies’ Undistributed Earnings. We obtain the outcome by applying Multiple Regression Analysis, and it proved that the reduction of Corporate Tax Rate and the company’s Undistributed Earnings ratio were positively correlated significantly. Owing to the drop of Corporate Income Tax from 25% to 17%, the tax differentiation between Corporate Income Tax and Consolidated Income Tax was hence widened, which led to the increase of the negative incentive of tax evasion for stockholders. As a result, the company was able to retain more profit, and its Undistributed Earnings were consequently improved. Moreover, there was a positive significance between the company’s competence to make a profit and its Undistributed Earnings. In other words, when the company scale was larger or when its capacity for profit-making was greater, it had more Undistributed Earnings . Furthermore, there was a significantly negative correlation between the company’s equity ratio , stock ownership ratio for broad of directors and the company’s Undistributed Earnings ratio. On one hand, when the company was in heavier debt ratio, it had to pay more interest, which resulted in fewer earnings accordingly; on the other, as the company’s board of directors had higher stock ownership, it had to pay more cashing dividends, which brought about lower Undistributed Earnings ratio.