Tax digitization and earnings management

Qiao Zhao and Wangqing Wang

International Review of Economics & Finance, 2025, vol. 100, issue C

Abstract: Based on a quasi-natural experiment of tax administration digitization practices, this paper explores the impact of tax administration digitization on earnings management using a multiple time-point DID model. The study finds that tax administration digitization significantly reduces the extent of corporate earnings management. Mechanism tests reveal that the higher the level of financing constraints, the more pronounced the inhibitory effect of tax administration digitization on earnings management. Additionally, tax administration digitization suppresses corporate earnings management by reducing information opacity and decreasing corporate tax avoidance behavior. Furthermore, the extent to which tax administration digitization inhibits earnings management varies across different types of enterprises.

Keywords: Tax digitization; Earnings management; Financing constraints; Information opacity; Corporate tax avoidance behavior (search for similar items in EconPapers)
JEL-codes: D80 G20 H25 O38 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:reveco:v:100:y:2025:i:c:s1059056025002400

DOI: 10.1016/j.iref.2025.104077

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