Study On The Book-tax Differences Based On The Perspective Of The Motive For Earnings Management

Because the relation between accounting standards and tax regulations inclines to separation pattern in China, it has difference between book income and taxable income consequentially. There is no dispute on this point. But among the studies on book-tax differences, besides institutional differences, what people more concerned is whether there are other factors which may be have an impact on book-tax differences, whether earnings management in listed companies play a role in the formation of the differences between book income and taxable income?This paper first summarizes the research on the relation between book-tax differences and the motive for earnings management of domestic and foreign scholars, then analyzes book-tax differences and the motive for earnings management theoretically, divides the earnings management behavior in listed companies into two parts:motive based on financial reports and motive based on tax avoidance. Next, the paper takes empirical study on the book-tax differences and the motive of earnings management, and on the relation between them. The results of descriptive statistics show that the scale effect of book-tax differences is obvious and book-tax differences are uneven in industries, but what inconsistent with the U.S. literature is book income less than taxable income in Chinese A-share listed companies in 2008. Regression analysis shows that book-tax differences of A-share listed companies has a significant positive correlation with the tax avoidance motivation which is represented by applicable tax rate, seasoned equity offering and avoiding special treatment and delisting, but the tax avoidance motivation which is represented by number of tax rates does not pass the relevant tests, it may be because Chinese listed companies reduce their overall tax burden by low-cost and low-risk tax planning strategy, such as pursuing tax preference or tax holidays, another possible explanation is that tax avoidance generally take place in the small and medium enterprises, for listed companies, they will pay more attention to raising funds in the capital markets, in addition to this, a serious financial crisis of 2008 contribute to an unobvious tax avoidance motivation. Finally, the paper summarizes the main conclusions and presents proposals on how to strengthen institutional collaboration and control the earnings management that cause book-tax differences.In addition to the motive based on financial reports, this paper concludes that the large book-tax differences also have some connection with tax avoidance motivation. The studies of this paper have significant theoretical meanings that help to deepen the study extent of differences between accounting standards and tax regulations, as well as to widen the study field of earnings management. Meanwhile, they also have significant practical meanings in providing a new way of thinking to strengthen the collaboration between accounting standards and tax regulations, and intensifying the government and the security supervisory department to cooperate to control the listed earnings management behaviors.