The Impact of Taxation on the Earnings Management of New Zealand Electric Power Boards

Posted: 3 Mar 1999

See all articles by Alastair Marsden

Alastair Marsden

University of Auckland - Business School

Jilnaught Wong

University of Auckland

Multiple version iconThere are 2 versions of this paper

Abstract

New Zealand electric power boards were licensed by the Electric Power Board Act 1925 to supply electricity in defined geographical franchise areas. These entities were exempt from income tax until 1987 when their earnings were subject to the statutory corporate tax rate of 48 percent. This paper investigates the extent to which New Zealand electric power boards manipulated their earnings in response to this regulatory change. The results are consistent with the hypothesis that managers of electric power boards increased discretionary expenses in the first taxable year. However, there is no evidence of decreased discretionary expenses in the final tax-exempt year.

JEL Classification: M41, M43, H25

Suggested Citation

Marsden, Alastair D.E. and Wong, Jilnaught, The Impact of Taxation on the Earnings Management of New Zealand Electric Power Boards. Pacific Accounting Review, Vol. 10, No. 2, December 1998. Available at SSRN: https://ssrn.com/abstract=149891

Alastair D.E. Marsden (Contact Author)

University of Auckland - Business School ( email )

Private Bag 92019
Room: C208
Auckland
New Zealand
64 9 373 7999 (Phone)
64 9 373 7406 (Fax)

Jilnaught Wong

University of Auckland ( email )

Private Bag 92019
Room: 210/328
Auckland
New Zealand
(64 9) 3737599 Ext. 8528 (Phone)
(64) 9 373-7406 (Fax)

Register to save articles to
your library

Register

Paper statistics

Abstract Views
1,114
PlumX Metrics