bei Google ScholarTitelangaben
Loy, Thomas:
Can Enforcement Be Too Strict? The Case of Tax Office Strictness.
2014
Veranstaltung: 10th Workshop on European Financial Reporting (EUFIN)
, 25.-26.09.2014
, Regensburg, Deutschland.
(Veranstaltungsbeitrag: Kongress/Konferenz/Symposium/Tagung
,
Paper
)
Abstract
This paper analyzes the effect of tax office strictness on two aspects of earnings management, namely loss avoidance and income smoothing. The results contribute to literature for multiple reasons. First, I extend findings by Garrod et al. (2007) to another jurisdiction which is also characterized by strong book-tax alignment. Private German firms also seem to have great incentives to avoid small losses in the face of political cost. Second, I provide a possible explanation on why "there is (...) substantial within-country variation in managers' incentives to smooth earnings" (LaFond et al. (2007), p. 14). There is some indication that something as homogeneous as tax law seems to be enacted differently within a country's legal framework. Finally, I am able to extend findings from research on honesty in managerial reporting into financial accounting research. I show that there seems to be a significant U-shaped relationship of tax office strictness with income smoothing.