Journal of Accounting and Economics Vol. 23 No. 3 1997
Financial reporting, tax costs, and book-tax conformity
Abstract
We investigate the role of book-tax conformity in firms' financial reporting activities using a unique set of publicly traded firms that were forced to switch for tax purposes from the cash method to the accrual method. Prior to the mandated change, little trade-off existed between tax planning and financial reporting goals for these firms. After the change, recognition criteria for tax and financial reporting purposes became more alike, increasing the trade-off between financial reporting and tax objectives. Our results suggest that required use of the accrual method for tax purposes causes firms to defer income for financial statement purposes.
- DOI
- 10.1016/s0165-4101(97)00009-8
- Volume
- 23
- Issue
- 3
- Pages
- 225-248
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref