英文摘要 |
The purpose of this study is mainly to examine the market reaction of firm’s earnings management activity by considering the discretionary accruals and the income tax, especially focusing on the later item. Because the tax rule of Taiwan was changed in 1998 so that the issue would be a good research topic for understanding whether the firm’s management and investor perceive the change in expense property of income tax. The results have shown: (1) both management and investor prefer the firm to beat marginally earnings target (avoid loss) in the short run, no matter how to reach the target. (2) Though the investor can’t find that the firms use discretionary accruals to beat marginally earnings target in the short run, however, the investor will find easily the firms use income tax to beat the earnings target. In addition, in the long term, the investor will perceive the importance of earnings quality. (3) After implementing of the imputation tax credit system, the investor understands the change on the expenses nature of the income tax. The investor will give them a higher value about those firms use the income tax expenses to manage earnings to reach the target more than those who have not reached the target. |