Tax Reporting Aggressiveness and its Relation to Aggressive Financial Reporting

  title={Tax Reporting Aggressiveness and its Relation to Aggressive Financial Reporting},
  author={Mary Margaret Frank and Luann J. Lynch and Sonja Olhoft Rego},
  journal={The Accounting Review},
ABSTRACT: We investigate the association between aggressive tax and financial reporting and find a strong, positive relation. Our results suggest that insufficient costs exist to offset financial and tax reporting incentives, such that nonconformity between financial accounting standards and tax law allows firms to manage book income upward and taxable income downward in the same reporting period. To examine the relation between these aggressive reporting behaviors, we develop a measure of tax… Expand
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