Tax incentives and earnings management: A study based on accelerated depreciation policy in China

Jiangyuan Wang, Wenlin Fan and Zhixiao Wang

Economic Analysis and Policy, 2024, vol. 81, issue C, 281-296

Abstract: This paper uses the accelerated depreciation policy for fixed assets implemented by Chinese tax authorities since 2014 to explore the relationship between tax incentives and earnings management. Results report the following: (1) The accelerated depreciation policy for fixed assets causes a significant increase in earnings management and the result persists after accounting for endogeneity problems; and (2) the accelerated depreciation policy for fixed assets has a more significant effect on firms with small pre-policy book-tax differences and low pre-policy investment growth. This paper supplements the research that tax policy affects earnings management behavior of firms.

Keywords: Tax incentives; Accelerated depreciation policy for fixed asset; Earnings management; Book-tax differences; Investment growth (search for similar items in EconPapers)
JEL-codes: E62 G30 G32 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S031359262300317X
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ecanpo:v:81:y:2024:i:c:p:281-296

DOI: 10.1016/j.eap.2023.11.036

Access Statistics for this article

Economic Analysis and Policy is currently edited by Clevo Wilson

More articles in Economic Analysis and Policy from Elsevier
Bibliographic data for series maintained by Catherine Liu ().