Abstract

http://ssrn.com/abstract=2112359
 


 



The Tradeoffs between Tax Savings and Financial Reporting Costs: Public versus Private Firms in China


Kenny Lin


Lingnan University

Lillian F. Mills


University of Texas at Austin - McCombs School of Business

Fang Zhang


affiliation not provided to SSRN

February 18, 2012

2012 AAA Annual Meeting - Tax Concurrent Sessions

Abstract:     
This study examines how public and private firms responded to the 2008 tax rate reduction in China from 33 percent to 25 percent. We find that private firms report significantly more income-decreasing accruals than public firms in 2007, prior to the tax rate reduction. These negative accruals are substantial and material both compared to public firms and compared to 2008. Private firms appeared to shift RMB 8 million in the aggregate, or 22 percent of total income. The results provide the first economy-wide estimates of the extent to which private firms respond materially to rate changes with inter-temporal income-shifting.

Number of Pages in PDF File: 35

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Date posted: July 18, 2012  

Suggested Citation

Lin, Kenny and Mills, Lillian F. and Zhang, Fang, The Tradeoffs between Tax Savings and Financial Reporting Costs: Public versus Private Firms in China (February 18, 2012). 2012 AAA Annual Meeting - Tax Concurrent Sessions. Available at SSRN: http://ssrn.com/abstract=2112359 or http://dx.doi.org/10.2139/ssrn.2112359

Contact Information

Kenny Lin (Contact Author)
Lingnan University ( email )
Tuen Mun
Hong Kong
Lillian F. Mills
University of Texas at Austin - McCombs School of Business ( email )
Austin, TX 78712
United States
Fang Zhang
affiliation not provided to SSRN ( email )
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