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《Journal of Shanxi Finance and Economics University》 2010-08
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The Earnings Management on Tax Avoidance and Its Reversal Effect——Empirical Evidence from Chinese Listed Companies

LI Zeng-fu,ZHENG You-huan(School of Economics & Management,South China Normal University,Guangzhou 510006,China)  
This paper investigates earnings management in China's listed companies in 2007 tax reform.The results show that:before the implementation of the new tax law,companies whose tax rate will be lower do income-decreasing earnings management obviously;but among the companies whose tax rate will be higher,the ones that faced a substantial elevation do income-increasing earnings management obviously;after the implementation of the new tax law,the discretionary accruals reversal;the study based on quarterly data finds that the profit-shifting occurs in the first quarter after the new tax law announcement and the last quarter before the new tax law implementation,the profit reversal occurs in the first quarter after the new tax law implementation.The results indicate that earnings management behavior of China's listed companies give a sensitive response to the announcement and implementation of tax law,tax avoidance is an important influential factor of the earnings management.
【Fund】: 广东省哲学社会科学基金资助项目(09E-10);; 广州市第20次社会科学研究基金资助项目
【CateGory Index】: F275
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