Research On The Influence Of Book-Tax Differences On Bank Debt Contract

Since the tax reform in 1994,the relationship between China's accounting system and income tax law has changed from a unified model in the past to a separate model.Due to different development purposes and service targets,in recent years,China's accounting standards and income tax laws have been developing in different directions: accounting standards and international accounting standards continue to converge,while income tax laws are constantly revised,and the gap between the two is gradually expanding.As a direct manifestation of the separation of the accounting system and the income tax law,the amount of book-tax differences in enterprises has been expanding and has received widespread attention from scholars.Existing research shows that book-tax differences are not only the result of institutional changes,but also affected by corporate earnings management and tax avoidance behavior.Large book-tax differences usually mean that companies have lower earnings quality,which affects stakeholder decisions and has broad economic consequences.As an important stakeholder,banks are also affected by book-tax differences.Banks are the main providers of funds for corporate debt financing.When making credit decisions,they usually use the debtor's risk characteristics in the form of accounting information as the basis for determining the structure of the bank's debt contract.If the book-tax differences contain uncertainties due to institutional changes and lower earnings quality information is understood by banks,From the perspective of two types of agency problems in the principal-agent theory,banks will consider that companies with large book-tax differences have higher debt default risks.Further analysis combined with the influencing factors of book-tax differences can be concluded that this risk is mainly affected by the manipulation book-tax difference generated by the choice of accounting policies.In order to reduce this risk of default to an acceptable low level,banks usually reduce the amount of loans they provide,raise interest rates on loans,and shorten loan terms.Based on the relevant data of the Shanghai and Shenzhen A-share listed companies in 2008-2017,after examining the impact of book-tax differences on bank debt contracts,It proves that large scale book-tax differences are significantly negatively correlated with bank loan rates,significantly positively correlated with bank loan costs,and significantly negatively correlated with bank loan maturities.After further examining the impact of manipulative and non-manipulative book-tax differences on bank debt contracts,the results indicate that bank debt contracts are primarily affected by manipulation book-tax differences.In response to the adverse impact of book-tax differences on banks and corporate finance and other stakeholders,it should be dealt with from the three main bodies of government,banks and enterprises: At the government level,it is necessary to coordinate the relationship between the two systems,improve the information disclosure system,and strengthen supervision;at the bank level,it is necessary to pay attention to tax factors in the debtor risk assessment and at the enterprise level,measures such as corporate governance are implemented to reduce earnings management and tax avoidance behavior to control the amount of book-tax differences to a reasonable level.