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A review of earnings management in private firms in response to tax rate changes

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  • Sundvik Dennis

    (Assistant Professor of Accounting, Hanken School of Economics, Hanken, Finland)

Abstract

In this paper, I present a review of tax accounting research with a specific focus on earnings management in response to changes in the corporate tax rate. While prior surveys of the tax accounting literature have a broad scope and focus primarily on publicly listed firms, I concentrate on studies examining private firms. These firms have stronger incentives to engage in tax-induced earnings management and recent evidence shows that firms in general defer earnings from high to low tax periods around tax reforms. I summarize contemporary studies, questions examined, and learnings. In addition, I discuss practical implications and outline future research possibilities.

Suggested Citation

  • Sundvik Dennis, 2017. "A review of earnings management in private firms in response to tax rate changes," Nordic Tax Journal, Sciendo, vol. 2017(1), pages 151-161, January.
    • Handle: RePEc:vrs:notajo:v:2017:y:2017:i:1:p:151-161:n:11
    DOI: 10.1515/ntaxj-2017-0011
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