Journal of Accounting and Economics Vol. 30 No. 1 2000
The effect of tax accounting rules on capital structure and discretionary accruals
Abstract
This study investigates the effect of changing tax accounting provisions for long-term manufacturing contracts between 1984–1985 and 1989–1990 on debt and accrual policies using a simultaneous equations approach. The results indicate that firms adjust debt ratios and discretionary accruals with relatively high book-tax conformity to achieve tax planning goals and use discretionary accruals with relatively low book-tax conformity to accomplish financial reporting objectives. Manufacturing firms directly affected by the change in tax rules for long-term contracts increase their leverage by 6.2 percentage points more than other manufacturers.
- DOI
- 10.1016/s0165-4101(00)00027-6
- Volume
- 30
- Issue
- 1
- Pages
- 1-31
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref