DOCTORAL WORKSHOP (JULY 2, 2011)
|Date & Time
|Saturday, July 2, 2011, 2:00pm-
|RIEB Meeting Room (Annex, 2nd Floor)
|Faculty, Graduate Students, and People with Equivalent Knowledge
|Copies of the paper will be available at Office of Promoting Research Collaboration.
Session 1 (2:00pm-3:45pm)
|Graduate School of Economics, Nagoya City University
|Tax Costs, Book-Tax Difference and Earnings Management: Empirical Evidence from Japan
|This paper investigates "book-tax conforming earnings management" that have current taxable income consequences and “book-tax nonconforming earnings management” that do not have current taxable income consequences by using Japanese individual financial data. To examine these earnings management activities and these relationships, I classify discretionary accruals in discretionary book tax accruals (DBTA) and discretionary book only accruals (DBOA) by connection with tax accounting rules. As results of investigation, I find the following things. (1) Firms use DBTA to minimize tax costs. On the other hand, (2) firms use DBTA and DBOA to beat benchmarks. Moreover, (3) in firms that are suspected to earnings upward, there is a negative correlation between DBTA and DBOA. Although the Japanese accounting system is closely linked to tax assessment, these results suggest that Japanese firms distinguish DBTA from DBOA, and that they use in combination DBTA and DBOA.
Session 2 (4:00pm-5:45pm)
|Yusuke TAKASU* and Makoto NAKANO*
|*Graduate School of Commerce and Management, Hitotsubashi University
|Quality of Smoothed Earnings: Persistence, Predictability, and Dividend Policy
|This study analyzes the quality of smoothed earnings from three perspectives: persistence, dividends stability, and earnings predictability. These three attributes were the foci of this study, based on Japanese managers' responses to questions regarding their motivation for income smoothing. This paper provides three new pieces of evidence. First, income smoothing in the previous period relates positively to future earnings persistence. Second, higher-smoothing firms will tend to pay stable dividends in the future, even when fundamental factors and corporate governance factors are under control. Third, there is a positive relation between income smoothing and the accuracy of earnings forecasts. Income smoothing acts a vehicle by which managers can reveal private information about future earnings. Overall, the evidence rendered by the current study shows that a manager's intention vis-à-vis income smoothing is achieved, and earnings quality is improved in terms of persistence, dividends stability, and predictability.