The Empirical Research On The Deferred Tax Expenses And Earning Management

Since 2007, China has implemented the new Accounting Standards, including IAS 18 Income Taxes ,it requires the listed companies must adopt the accounting balance sheet liability method, at the same times, the concept of the deferred income tax is introduced. For the time of implementation is short, currently in domestic literatures are rarely researched on earnings management from the deferred tax expense or the book-tax differences; foreign scholars have achieved a lot; so this paper attempts to explore the deferred tax expense can whether or not to detect earnings management.The paper uses the combination of theory and empirical methods to study the above issues. Based on theoretical analysis, this study put forward hypotheses, Based on Phillps, Pincus, and Rego (2003) model and modified Jones model, this paper constructs a model to reflect the relationship between deferred tax expense and the earnings management, takes non-financial listed companies in shanghai stock market to turn around and avoid the loss for analysis, using SPSS statistical analysis tools to verify the research hypothesis.This article is divided into five parts, the first part is the introduction, to introduce writing background and the motivation; the second part is the theoretical basis of this study, mainly on the treatment of income tax in domestic and international, introduce the earnings management from the meaning, motivation, tools and measurement methods, and summarizes the book-tax differences or the deferred tax expenses on earnings management research; the third part is the design part of the empirical research, including the assumptions made, sample selection and model choice; the fourth part is the empirical test results; the fifth part are the conclusions of this paper and its deficiency. On the basis of the above work, this paper gets the conclusion: the deferred income tax charge can be used to detect earnings management.