Can tax enforcement affect misstatements? From the perspective of tax account and non-tax account misstatements

Bin Li and Chen Ma

Asia-Pacific Journal of Accounting & Economics, 2021, vol. 28, issue 3, 357-374

Abstract: This study examines the relationship between tax enforcement and accounting misstatements in China and investigates whether the effect of tax enforcement on tax account misstatement (TAM) and non-tax account misstatement (NTAM) differs. We find evidence that stricter tax enforcement by tax authorities reduces the incidence of accounting misstatements and, more importantly, this effect is the same for TAM and NTAM. However, we find that as tax enforcement increases, firms are less (more) likely to misstate tax accounts for income-increasing (income-decreasing) misstatements than non-tax accounts. Overall, our evidence is consistent with tax authorities disciplining earnings management, and more importantly, the disciplining occurs in both the tax and non-tax related accounts.

Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://hdl.handle.net/10.1080/16081625.2019.1618718 (text/html)
Access to full text is restricted to subscribers.

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:taf:raaexx:v:28:y:2021:i:3:p:357-374

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/raae20

DOI: 10.1080/16081625.2019.1618718

Access Statistics for this article

Asia-Pacific Journal of Accounting & Economics is currently edited by Yin-Wong Cheung, Hong Hwang, Jeong-Bon Kim, Shu-Hsing Li and Suresh Radhakrishnan

More articles in Asia-Pacific Journal of Accounting & Economics from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().