The Research On The Effect Of Book-Tax Difference To Earnings Persistence

With the continuous development of securities market in China, the quality of accounting information and a stable return on investment have became the focus attention of investors, accounting earnings is an important carrier which can reflected the quality of accounting information,many investor pay attention to Earnings persistence which as an important feature of earnings. Separation of accounting standards and tax laws bring a new space to business managers to manipulate earnings, so that we can evaluate earnings quality according to the tax information. How to use available accounting information to evaluate the earnings persistence of listed companies is an emerging research topic in recent years.In this paper, we through the book-tax differences, respectively focus on manufacturing industry, protected industry and banking industry to conduct the research of earnings persistence, our study found: Firstly, in the manufacturing industry, the earnings persistence of the companies which have the large book-tax differences is lower than that companies which have the small book-tax differences, and the large positive book-tax differences earnings persistence is lower than the large negative book-tax differences earnings persistence; Secondly, for the protected industry, the earnings persistence of the companies with large positive book-tax is higher than the companies with large negative book-tax differences, and compared with unprotected industry, the protected industry have lower earnings persistence; Thirdly, Our research selected the 16 listed commercial banks during five years(2007-2013) as research samples, examined the relationship between book-tax differences and earnings persistence in the banking industry. The empirical results show, in the banking industry, book-tax differences can significantly reflect earnings persistence, from the direction aspect, the earnings persistence of the banks which with the large positive book-tax differences, are lower than the banks with the large negative book-tax differences; from the quota aspect, the larger book-tax differences, the lower earnings persistence.