Objective -
This research examines the effect of company size, changes in out-cash flow, return on assets,
conservatism, and profit levelling on earnings management.
Methodology/Technique -
The results of this research show that banking capital structure, capital intensity, intensity
of inventory, and intensity of R & D have a significant impact on effective tax rates. Further, the results also show that,
with respect to the non-banking sector, R & D expenditure contributes significantly to effective tax rates.
Simultaneously, earnings management and effective tax rates, as well as other factors, also have an effect on book tax
gap.
Findings -
This study shows that profit management has a significantly positive effect on book tax gap, and effective
tax rates has a significant negative effects o book tax gap. In terms of the non-banking sector, earnings management and
effective tax rate have no effect on book tax gap. Deferred tax expenses have a lower capability to detect earnings
management than accrual, in both the banking and non-banking sector.
Novelty -
The study of management capabilities optimizes the role of book tax gap and effective tax rate for earning
management. Both tax management and earnings management are closely related to behavior management in managing
a company based on the agency theory. Furthermore, the study identifies a relationship between earnings management
and book tax gap.
Type of Paper:
Empirical
Keywords:
Book Tax Gap; Effective Tax Rate; Earnings Management; Accrual Total; Indonesia.
JEL Classification:
H26, H29.
