Research On The Value Revelance Of Book-tax Differences

With the speedy development of the world economy,the economic and tradeexchanges among countries become more and more frequent,world economy has beenintegrated.while accounting as the world universal commercial language,Accountingstandards to be identical is the general trend. With the development and growth ofmarket economy in China,our accounting standards also need to adapt to therapid economic environment,and to provides the convenience for China whentransaction with other countries.The financial department promulgated the newaccounting standards in2006, which"Enterprise Accounting Standards No.eighteenth income tax"(CAS18) has changed greatly.It proposed the concept oftemporary differences, and divide the time difference to permanent differences and thetemporary difference, the book-tax differences further expanded, and from the assetliability view change to the profit and loss view.Then whether book-tax difference canprovide incremental accounting information? Whether Investors can makeinvestment decisions and evaluate the enterprise value according to the book-taxdifferences.Book-tax differences part reflect the manipulation behavior (such asearnings management and tax avoidance) to handling accounting,another part reflectthe difference between the accounting standard and tax system, then when investorsusing book-tax differences to evaluate enterprise’s value,which difference impact onthe enterprise value (i.e. stock price)?These are the contents of this paper to study.In this paper,we will use the data from the China’s Shanghai Stock Exchange andShenzhen Stock Exchange listed companies as study sample in2009,2010,2011,2012and2013.according to the nature of book-tax differences,we divided it into handlingbook-tax differences and institutional Book-tax difference, and through the taxadjustment projects build a model to estimate the handling book-tax differences, andisolated from normal book tax differences (i.e. institutional book tax differences). In thispaper, using price model to study book-tax differences’ value correlation. The resultsshow that the book-tax differences with the stock price have value relevance, and have asignificant negative correlation. Further analysis shows the handling book-taxdifferences have a significantly negative correlation,and institutional book-taxdifferences also have a negative correlation with the stock price. And found levelsof significant control of book tax differences bigger than institutional book-taxdifferences.Shows that the stock market can distinguish companies’control behavior by book-tax differences,and price differently on different book-tax differences.