The DOI matches its Crossref record; 35 of the 35 references it cites were found in a registry or an index.
How Much Will Firms Pay for Earnings That Do Not Exist? Evidence of Taxes Paid on Allegedly Fraudulent Earnings
Open accessAbstract
We analyze a sample of firms accused of fraudulently overstating their earnings and examine the extent, if any, to which they paid additional income taxes on the allegedly fraudulent earnings. Based on restatements of current tax expense adjusted for the tax benefits of stock options, the evidence indicates that many firms included the overstated financial accounting income on their tax returns, thus overpaying their taxes in the process of inflating their accounting earnings. We estimate that the median firm sacrificed eight cents in additional income taxes per dollar of inflated pretax earnings. In aggregate, we estimate that the firms in our sample paid $320 million in taxes on overstated earnings of about $3.36 billion. These results indicate how far managers of firms are willing to go when allegedly inflating earnings.
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Cites
The theory and practice of corporate finance: evidence from the field
Graham, J. R., & Harvey, C. R. (2001) · Journal of Financial Economics · doi:10.1016/s0304-405x(01)00044-7 · Cited by 5,939
DECHOW, P. M., SLOAN, R. G., & SWEENEY, A. P. (1996) · Contemporary Accounting Research · doi:10.1111/j.1911-3846.1996.tb00489.x · Cited by 4,065
Earnings management to avoid earnings decreases and losses
Burgstahler, D., & Dichev, I. (1997) · Journal of Accounting and Economics · doi:10.1016/s0165-4101(97)00017-7 · Cited by 3,829
The effect of bonus schemes on accounting decisions
Healy, P. M. (1985) · Journal of Accounting and Economics · doi:10.1016/0165-4101(85)90029-1 · Cited by 3,283
The effects of bonus schemes on accounting decisions
Healy, P. M. (2011) · DSpace@MIT (Massachusetts Institute of Technology) · Cited by 2,579
Teoh, S. H., Welch, I., & Wong, T. J. (1998) · Journal of Financial Economics · doi:10.1016/s0304-405x(98)00032-4 · Cited by 1,637
Determinants of market reactions to restatement announcements
Palmrose, Z.-V., Richardson, V. J., & Scholz, S. (2004) · Journal of Accounting and Economics · doi:10.1016/j.jacceco.2003.06.003 · Cited by 1,259
Journal of Accounting Research
(2010) · Journal of Accounting Research · doi:10.1111/(issn)1475-679x · Cited by 1,126
Financial Accounting Standards Board (FASB)
(2008) · Encyclopedia of Finance · doi:10.1007/0-387-26336-5_844 · Cited by 1,095
Empirical tax research in accounting
Shackelford, D. A., & Shevlin, T. (2001) · Journal of Accounting and Economics · doi:10.1016/s0165-4101(01)00022-2 · Cited by 951
Cited by
Corporate Tax Avoidance and High Powered Incentives
Desai, M. A., & Dharmapala, D. (2004) · SSRN Electronic Journal · doi:10.2139/ssrn.532702 · Cited by 538
Public Pressure and Corporate Tax Behavior
DYRENG, S. D., HOOPES, J. L., & WILDE, J. H. (2016) · Journal of Accounting Research · doi:10.1111/1475-679x.12101 · Cited by 533
The Effect of Tax Authority Monitoring and Enforcement on Financial Reporting Quality
Hanlon, M., Hoopes, J. L., & Shroff, N. (2014) · The Journal of the American Taxation Association · doi:10.2308/atax-50820 · Cited by 246
Self-citation
Metadata
- Authors
- Erickson, M., Hanlon, M., & Maydew, E. L.
- Venue
- The Accounting Review
- Publisher
- American Accounting Association
- Published
- 2004-04-01
- Volume
- 79
- Issue
- 2
- Pages
- 387-408
- ISSN
- 0001-4826 (ISSN-L)
- 1558-7967
- OpenAlex
- W3121661444
- Cited by
- 394
- References
- 35
- FWCI
- 91.60
- Type
- journal article
- Language
- en
- Open access
- green
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- Erickson, M., Hanlon, M., & Maydew, E. L. (2004). How Much Will Firms Pay for Earnings That Do Not Exist? Evidence of Taxes Paid on Allegedly Fraudulent Earnings. The Accounting Review. https://doi.org/10.2308/accr.2004.79.2.387
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Contains information from the Semantic Scholar Academic Graph Datasets, made available under the ODC Attribution License (ODC-BY 1.0).
Semantic Scholar’s data is described in: Kinney, R., et al. (2023). The Semantic Scholar Open Data Platform. arXiv:2301.10140.
