A Unifying Model of How the Tax System and Generally Accepted Accounting Principles Affect Corporate Behavior
45 Pages Posted: 22 Jan 2007
There are 2 versions of this paper
A Unifying Model of How the Tax System and Generally Accepted Accounting Principles Affect Corporate Behavior
A Unifying Model of How the Tax System and Generally Accepted Accounting Principles Affect Corporate Behavior
Date Written: January 12, 2007
Abstract
This paper models the impact of the tax system and GAAP on the real and financial reporting decisions of corporations. It provides a first step toward joint evaluation of taxation and financial reporting in the standard economic analyses of corporate behavior. The key finding is that value arises from real decisions that provide firms with discretion in their tax and financial reporting. This desire for flexibility modifies the optimal decisions of firms, in theory, and we provide examples that illustrate this behavior in the real world.
Keywords: taxation, financial reporting, accounting, discretion
JEL Classification: H25, H21, M41, M44
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Earnings Management: New Evidence Based on Deferred Tax Expense
By John D. Phillips, Morton Pincus, ...
-
An Evaluation of Alternative Measures of Corporate Tax Rates
-
By Merle Erickson, Michelle Hanlon, ...
-
The Relation between Financial and Tax Reporting Measures of Income
By Gil B. Manzon, Jr. and George Plesko
-
What Can We Infer About a Firm's Taxable Income from its Financial Statements?