Tax-induced earnings management within a dividend imputation system

Bala Balachandran, Christopher Dean Hanlon, Hanghang (Candie) Tu

Research output: Contribution to journalArticleResearchpeer-review

Abstract

This study examines whether, under a full dividend imputation system, companies defer income until tax changes beneficial to shareholders take effect. Using a sample of Australian listed companies, we find that companies manage earnings downwards via discretionary current accruals in the year preceding a reduction in personal income tax rates, and in the year preceding a change in the tax status of superannuation funds, which reverse the first year both changes operate in unison. We also examine whether such earnings management is a function of a company?s ownership structure and dividend payout policy.
Original languageEnglish
Pages (from-to)555 - 582
Number of pages28
JournalAustralian Tax Forum
Volume28
Issue number3
Publication statusPublished - 2013

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