Title
Earnings management in business groups : tax incentives or expropriation concealment? Earnings management in business groups : tax incentives or expropriation concealment?
Author
Faculty/Department
Faculty of Applied Economics
Publication type
article
Publication
Urbana, Ill. ,
Subject
Economics
Source (journal)
International journal of accounting. - Urbana, Ill.
Volume/pages
49(2014) :1 , p. 27-52
ISSN
0020-7063
vabb
c:vabb:379378
Carrier
E
Target language
English (eng)
Full text (Publishers DOI)
Affiliation
University of Antwerp
Abstract
This study provides evidence that Belgian firms affiliated to a business group (holding) manage their earnings more than stand-alone firms. Earnings management is especially more prevalent in fully owned group firms compared to group firms with minority shareholders. This evidence is consistent with the hypothesis that controlling shareholders face fewer constraints to manage earnings if opportunistic earnings management cannot adversely affect the value of minority shareholders and is inconsistent with the claim that group firms would engage in earnings management to hide controlling shareholders' self-serving transactions.On the incentive part, we find that group firms strategically manage earnings in response to tax incentives. More specifically, we show that signed discretionary accruals of group firms depend significantly more on the marginal tax rate status of the firm as compared to independent firms. Finally, we document that earnings management is particularly facilitated through intra-group transactions. © 2014 University of Illinois. All rights reserved.
E-info
https://repository.uantwerpen.be/docman/iruaauth/af0bdc/391b4551609.pdf
Handle