The Research On The Impact Of The Book-Tax Differences And Earnings Management On The Corporate Valuation

With the reform and perfection of China's economic system,accounting and tax law from a high degree of consistency gradually transformed into a moderate separation model,which will bring book-tax differences inevitably.Driven by the dual motives of maximizing accounting earnings and minimizing tax costs,the existence of book-tax differences also provides new opportunities for the managers to manage earnings,and managers may reduce costs by manipulating non-taxable items to increase revenues.So the difference of book and tax also becomes an effective index to measure the level of earnings management.In the principal-agent relationship,the imperfect contract and the insufficient information make the earnings management come into being.Based on various earnings management motivations,the managers often use earnings management which is not easy to be identified,thus there is a distortion problem of the company disclosed financial information.If investors are able to discern the earnings management behavior of the company,it is reasonable to estimate the value of the earnings management company when making the investment judgment,and the market will price it reasonably.This paper draws on the research results of related scholars on book-tax differences and earnings management,based on the analysis of the relationship between book-tax differences and earnings management,this paper further studies the influence of different earnings management on corporate valuation,andexplores whether earnings management plays a mediating role in the relationship between book-tax differences and corporate valuation.First of all,this paper introduces the book-tax differences and earnings management,and analyzes the impact of book-tax differences on earnings management,thenanalysises the different ways of earnings management on the company's valuation.On the basis of the theoretical analysis,this paper draws lessons from the research of some scholars to measure the book-taxdifferences and earnings management separately,and analyzes the influence of book-tax differences on earnings management and the information content of book-tax.Based on the empirical research of listed companies in China,there is a positive correlation between the tax difference and accrued earnings management,and a negative correlation with real earnings management.Because of the information asymmetry,investors give a higher valuation of the company with big difference in the book and tax,and higher valuation with accrued earnings management,lower valuation with real earnings management.Furthermore,earnings management plays a certain degree of intermediary effect in the relationship between book-tax differences and corporate valuation.Book-tax differences and earnings management can provide useful information for investors to make decisions.Based on the role of book-tax differencesbetween earnings management and corporate valuation,the research in this paper can provide empirical evidence for investors to effectively identify the earnings management activities of the company,and from the perspective of book-tax differences and earnings management for investors to correctly assess the value of the company to provide a reference,help investors to improve decision-making and market efficiency.