Does IFRS convergence improve earnings informativeness? An analysis from the book-tax tradeoff perspective

References

• Abdel-Khalik, A. R., Wong, K. A., and Wu, A, 1999. The information environment of China’s A and B shares: can we make sense of the numbers? The International Journal of Accounting, 34 (4), 467–489.
   Google Scholar
• Aharony, J., Lee, C.J., and Wong, T.J, 2000. Financial packaging of IPO firms in China. Journal of Accounting Research, 38 (1), 103–126.
   Web of Science ®Google Scholar
• Ahmed, A.S., Neel, M., and Wang, D, 2013. Does mandatory adoption of IFRS improve accounting quality? Preliminary evidence. Contemporary Accounting Research, 30 (4), 1344–1372.
   Web of Science ®Google Scholar
• Ali, A., Hwang, L.S., and Trombley, M.A, 2003. Arbitrage risk and the book-to-market anomaly. Journal of Financial Economics, 69 (2), 355–373.
   Web of Science ®Google Scholar
• André, P., Filip, A., and Paugam, L, 2015. Impact of mandatory IFRS adoption on conditional conservatism in Europe. Journal of Business Finance and Accounting, 42 (3-4), 482–514.
   Web of Science ®Google Scholar
• Atwood, T.J., Drake, M.S., and Myers, L.A, 2010. Book-tax conformity, earnings persistence and the association between earnings and future cash flows. Journal of Accounting and Economics, 50 (1), 111–125.
   Web of Science ®Google Scholar
• Atwood, T.J., Drake, M.S., Myers, J.N., and Myers, L.A, 2012. Home country tax system characteristics and corporate tax avoidance: International evidence. The Accounting Review, 87 (6), 1831–1860.
   Web of Science ®Google Scholar
• Ball, R., and Shivakumar, L, 2006. The role of accruals in asymmetrically timely gain and loss recognition. Journal of Accounting Research, 44 (2), 207–242.
   Web of Science ®Google Scholar
• Ball, R., Kothari, S.P., and Robin, A, 2000. The effect of international institutional factors on properties of accounting earnings. Journal of Accounting and Economics, 29 (1), 1–51.
   Web of Science ®Google Scholar
• Barth, M. E., Landsman, W. R., and Lang, M.H, 2008. International accounting standards and accounting quality. Journal of Accounting Research, 46 (3), 467–498.
   Web of Science ®Google Scholar
• Bartlett, B., 2005. The beauty of the flat tax: It’s fair and it works. Available from: https://www.nationalreview.com/2005/03/beauty-flat-tax-ridhancock/ [Accessed 21 August 2019].
   Google Scholar
• Blaylock, B.S., Gaertner, F.B., and Shevlin, T, 2015. The association between book-tax conformity and earnings management. Review of Accounting Studies, 20 (1), 141–172.
   Web of Science ®Google Scholar
• Burgstahler, D., Hail, L., and Leuz, C, 2006. The importance of reporting incentives: earnings management in European private and public firms. The Accounting Review, 81 (5), 983–1016.
   Web of Science ®Google Scholar
• Chalmers, K., Navissi, F., and Qu, W, 2010. Value relevance of accounting information in China pre- and post-2001 accounting reforms. Managerial Auditing Journal, 25 (8), 792–813.
   Google Scholar
• Chan, K. H, and Wu, D, 2011. Aggregate quasi rents and auditor independence: Evidence from audit firm mergers in China. Contemporary Accounting Research, 28 (1), 175–213.
   Web of Science ®Google Scholar
• Chan, K. H., Mo, P. L. L., and Tang, T, 2016. Tax avoidance and tunneling: empirical analysis from an agency perspective. Journal of International Accounting Research, 15 (3), 49–66.
   Web of Science ®Google Scholar
• Chan, K.H., Lin, K.Z., and Mo, P.L.L, 2006. A political-economic analysis of auditor reporting and auditor switch. Review of Accounting Studies, 11 (1), 21–48.
   Web of Science ®Google Scholar
• Chan, K.H., Lin, K.Z., and Mo, P.L.L, 2010. Will a departure from tax-based accounting encourage tax noncompliance? archival evidence from a transition economy. Journal of Accounting and Economics, 50 (1), 58–73.
   Web of Science ®Google Scholar
• Chan, K.H., Lin, K.Z., and Tang, F, 2013. Tax effects of book-tax conformity, financial reporting incentives, and firm size. Journal of International Accounting Research, 12 (2), 1–25.
   Google Scholar
• Chan, K.H., Lin, K.Z., and Wang, R, 2012. Government ownership, accounting-based regulations, and the pursuit of favorable audit opinions: Evidence from China. Auditing: A Journal of Practice and Theory, 31 (4), 47–64.
   Web of Science ®Google Scholar
• Chen, K.C., and Yuan, H, 2004. Earnings management and capital resource allocation: Evidence from China’s accounting-based regulation of rights issues. The Accounting Review, 79 (3), 645–665.
   Web of Science ®Google Scholar
• Chen, S., Sun, S.Y.J., and Wu, D, 2010. Client importance, institutional improvements, and audit quality in China: An office and individual auditor level analysis. The Accounting Review, 85 (1), 127–158.
   Web of Science ®Google Scholar
• Chen, S., Sun, Z., and Wang, Y, 2002. Evidence from China on whether harmonized accounting standards harmonize accounting practices. Accounting Horizons, 16 (3), 183–197.
   Google Scholar
• Chen, S., Wang, Y., and Zhao, Z, 2009. Regulatory incentives for earnings management through asset impairment reversals in China. Journal of Accounting, Auditing and Finance, 24 (4), 589–620.
   Google Scholar
• Dechow, P.M., Ge, W., and Schrand, C, 2010. Understanding earnings informativeness: A review of the proxies, their determinants and their consequences. Journal of Accounting and Economics, 50 (2-3), 344–401.
   Web of Science ®Google Scholar
• Dechow, P.M., Sloan, R.G., and Sweeney, A.P, 1995. Detecting earnings management. The Accounting Review, 70 (2), 193–226.
   Web of Science ®Google Scholar
• Desai, M., Dyck, I., and Zingales, L, 2007. Theft and taxes. Journal of Financial Economics, 84, 591–623.
   Web of Science ®Google Scholar
• Dobija, D., and Klimczak, K.M, 2010. Development of accounting in Poland: market efficiency and the value relevance of reported earnings. The International Journal of Accounting, 45, 356–374.
   Google Scholar
• DuCharme, L.L., Malatesta, P.H., and Sefcik, S.E, 2004. Earnings management, stock issues, and shareholder lawsuits. Journal of Financial Economics, 71 (1), 27–49.
   Web of Science ®Google Scholar
• Erickson, M., Hanlon, M., and Maydew, E, 2004. How much will firms pay for earnings that do not exist? Evidence of taxes paid on allegedly fraudulent earnings. The Accounting Review, 79 (2), 387–408.
   Web of Science ®Google Scholar
• Fan, G., Wang, X., and Zhu, H, 2010. NERI Index of Marketization of China’s Provinces: 2009 Report. Beijing, China: Economic Science Press. (In Chinese).
   Google Scholar
• Filip, A., and Raffournier, B, 2010. The value relevance of earnings in a transition economy: The case of Romania. The International Journal of Accounting, 45, 77–103.
   Google Scholar
• Francis, J., LaFond, R., Olsson, P.M., and Schipper, K, 2004. Costs of equity and earnings attributes. The Accounting Review, 79 (4), 967–1010.
   Web of Science ®Google Scholar
• Francis, J., Schipper, K., and Vincent, I, 2005. Earnings and dividend informativeness when cash flow rights are separated from voting rights. Journal of Accounting and Economics, 39 (2), 329–360.
   Web of Science ®Google Scholar
• Frank, M., Lynch, L., and Rego, S, 2009. Tax reporting aggressiveness and its relation to aggressive financial reporting. The Accounting Review, 84 (2), 467–496.
   Web of Science ®Google Scholar
• Goncharov, I., and Zimmermann, J, 2006. Earnings management when incentives compete: The role of tax accounting in Russia. Journal of International Accounting Research, 5 (1), 41–65.
   Google Scholar
• Graham, J.R., and Smith Jr., C.W., 1999. Tax incentives to hedge. Journal of Finance, 54 (6), 2241–2262.
   Web of Science ®Google Scholar
• Hanlon, M., and Heitzman, S, 2010. A review of tax research. Journal of Accounting and Economics, 50 (2–3), 127–178.
   Web of Science ®Google Scholar
• Hanlon, M., Laplante, S.K., and Shevlin, T, 2005. Evidence for the possible information loss of conforming book income and taxable income. Journal of Law and Economics, 48 (2), 407–442.
   Web of Science ®Google Scholar
• Hanlon, M., Maydew, E., and Shevlin, T, 2008. An unintended consequence of book-tax conformity: A loss of earnings informativeness. Journal of Accounting and Economics, 46 (2-3), 294–311.
   Web of Science ®Google Scholar
• Harris, T.S., Lang, M., and Mőller, H.P, 1994. The value relevance of German accounting measures: An empirical analysis. Journal of Accounting Research, 32 (2), 187–209.
   Web of Science ®Google Scholar
• Haw, I., Qi, D., and Wu, W, 1999. Value-relevance of earnings in an emerging capital market: The case of A-shares in China. Pacific Economic Review, 4 (3), 337–348.
   Google Scholar
• Hayn, C, 1995. The information content of losses. Journal of Accounting and Economics, 20, 125–153.
   Web of Science ®Google Scholar
• He, X., Wong, T.J., and Young, D, 2012. Challenges for implementation of fair value accounting in emerging markets: Evidence from China. Contemporary Accounting Research, 29 (2), 538–562.
   Web of Science ®Google Scholar
• Healy, P.M., and Wahlen, J.M, 1999. A review of the earnings management literature and its implications for standard setting. Accounting Horizons, 13 (4), 365–383.
   Google Scholar
• IFRS, 2017. Analysis of the IFRS jurisdiction profiles. Available from: http://archive.ifrs.org/Use-around-the-world/Pages/Analysis-of-the-IFRS-jurisdictional-profiles.aspx/ [Accessed 21 August 2019].
   Google Scholar
• Jones, J, 1991. Earnings management during import relief investigations. Journal of Accounting Research, 29 (2), 193–228.
   Web of Science ®Google Scholar
• Karampinis, N.I., and Hevas, D.L, 2013. Effects of IFRS adoption on tax-induced incentives for financial earnings management: Evidence from Greece. The International Journal of Accounting, 48, 218–247.
   Google Scholar
• Ke, B., Lennox, C. S., and Xin, Q, 2015. The effect of China’s weak institutional environment on the quality of Big 4 audits. The Accounting Review, 90 (4), 1591–1619.
   Web of Science ®Google Scholar
• Kurt, A.C, 2018. How do financial constraints relate to financial reporting quality? Evidence from seasoned equity offerings. European Accounting Review, 27 (3), 527–557.
   Web of Science ®Google Scholar
• Lam, K. C. K, Sami, H., and Zhou, H, 2013. Changes in the value relevance of accounting information over time: Evidence from the emerging market of China. Journal of Contemporary Accounting & Economics, 9, 123–135.
   Google Scholar
• Leigh, E., 2011. A flat tax would revitalise the British economy. Available from: https://www.conservativehome.com/platform/2011/09/edward-leigh-mp-flat-tax-a-radical-alternative.html [Accessed 21 August 2019].
   Google Scholar
• Lennox, C., Lisowsky, P., and Pittman, J, 2013. Tax aggressiveness and accounting fraud. Journal of Accounting Research, 51 (4), 739–778.
   Web of Science ®Google Scholar
• Lin, B., Lu, R., and Zhang, T, 2012. Tax-induced earnings management in emerging markets: Evidence from China. Journal of the American Taxation Association, 34 (2), 19–44.
   Google Scholar
• Lin, K.Z., Mills, L., and Zhang, F, 2014. Public versus private firm responses to the tax rate reduction in China. Journal of the American Taxation Association, 36 (1), 137–163.
   Google Scholar
• Liu, C., Yao, L.J., Hu, N., and Liu, L, 2011. The impact of IFRS on accounting quality in a regulated market: An empirical study of China. Journal of Accounting, Auditing and Finance, 26 (4), 659–676.
   Google Scholar
• Liu, J., and Liu, C, 2007. Value relevance of accounting information in different stock market segments: The case of Chinese A-. B-, and H-shares. Journal of International Accounting Research, 6 (2), 55–81.
   Google Scholar
• Liu, Q., and Lu, Z, 2007. Corporate governance and earnings management in the Chinese listed companies: A tunneling perspective. Journal of Corporate Finance, 13, 881–906.
   Web of Science ®Google Scholar
• Nobes, C., 2011. International variations in IFRS adoption and practice. The Association of Chartered Certified Accountants. Available from: https://www.accaglobal.com/content/dam/acca/global/PDF-technical/financial-reporting/rr-124-001.pdf
   Google Scholar
• Peng, S., and Bewley, K, 2010. Adaptability to fair value accounting in an emerging economy: A case study of China’s IFRS convergence. Accounting, Auditing and Accountability Journal, 23 (8), 982–1011.
   Web of Science ®Google Scholar
• Phillips, J., Pincus, M., and Rego, S, 2003. Earnings management: New evidence based on the deferred tax expenses. The Accounting Review, 78 (2), 491–521.
   Web of Science ®Google Scholar
• Phuong, N.C., and Richard, J, 2011. Economic transition and accounting system reform in Vietnam. European Accounting Review, 20 (4), 693–725.
   Web of Science ®Google Scholar
• Rabushka, A., 2003. The flat tax in Russia and the New Europe. National Center for Policy Analysis, Brief Analysis. No. 452.
   Google Scholar
• Sami, H., and Zhou, D, 2004. A comparison of value relevance of accounting information in different segments of the Chinese stock market. The International Journal of Accounting, 39, 403–427.
   Google Scholar
• Scholes, M., Wolfson, M., Erickson, M., Maydew, E., and Shevlin, T, 2008. Taxes and Business Strategy: A Planning Approach (4th ed). Upper Saddle River, NJ: Pearson Prentice Hall.
   Google Scholar
• SCMP (South China Morning Post), 2019. China doubles quota for foreign investors, paving way for global funds to get bigger bite of A-shares amid stock market slump. Available from: https://www.scmp.com/business/banking-finance/article/2181941/china-doubles-foreign-exchange-quota-foreign-investors Accessed 21 August 2019].
   Google Scholar
• Shivakumar, L, 2000. Do firms mislead investors by overstating earnings before seasoned equity offerings? Journal of Accounting and Economics, 29, 339–371.
   Web of Science ®Google Scholar
• Tang, T, 2015. Does book-tax conformity deter opportunistic book and tax reporting? An international analysis. European Accounting Review, 24 (3), 441–469.
   Web of Science ®Google Scholar
• Tang, T., and Firth, M, 2011. Can book-tax differences capture earnings management and tax management? empirical evidence from China. The International Journal of Accounting, 46 (2), 175–204.
   Google Scholar
• Tang, T., and Firth, M, 2012. Earnings persistence and stock market reactions to the different information in book-tax differences: Evidence from China. The International Journal of Accounting, 47 (3), 369–397.
   Google Scholar
• Tucker, J.W., and Zarowin, P.A, 2006. Does income smoothing improve earnings informativeness? The Accounting Review, 81 (1), 251–270.
   Web of Science ®Google Scholar
• Wang, X., and Wu, M, 2011. The quality of financial reporting in China: An examination from an accounting restatement perspective. China Journal of Accounting Research, 4, 167–196.
   Google Scholar
• Watrin, C., Ebert, N., and Thomsen, M, 2014. Book-tax conformity and earnings management: insights from European one- and two-book systems. Journal of the American Taxation Association, 36 (2), 55–89.
   Google Scholar
• Zéghal, D., Chtourou, S., and Fourati, Y.M, 2012. The effect of mandatory adoption of IFRS on earnings informativeness: Evidence from the European Union. Journal of International Accounting Research, 11 (2), 1–25.
   Google Scholar