Earnings manipulation: cost of capital versus tax

Aasmund Eilifsen, Kjell Henry Knivsfla and Frode Sættem

European Accounting Review, 1999, vol. 8, issue 3, 481-491

Abstract: We show that if taxable income were linked to accounting income, there will exist an automatic safeguard against manipulation of earnings within the analysed framework. Separating taxable income from accounting income will remove this self-controlled mechanism, and accordingly create a need for separate countermeasures to prevent earnings manipulation.

Date: 1999
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DOI: 10.1080/096381899335899

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