적자회피 및 기업지배구조가 현금유효세율과 GAAP 유효세율의 차이에 미치는 영향

This study examines whether firms manage earnings by lowering their tax expenses to avoid reporting losses, and how corporate governance moderates firms’ earnings management through tax expenses. We use tax divergence (hereafter TD), defined as the difference between a firm’s cash effective tax rate (ETR) and GAAP ETR, as a proxy of earnings management through tax expenses, and corporate governance and ESG rating from KCGS as proxies for corporate governance. Loss avoidance is defined as reporting a small positive earnings. We find positive relations between TD and loss avoidance. These relations appear to be weakened by better corporate governance, the effect of which seems to be stronger when loss avoidance is defined using a smaller interval. However, we do not observe significant relations between TD and earnings decrease avoidance in the additional analyses. Our findings suggest that firms may try to avoid reporting losses by reducing tax expenses, and that good corporate governance could help curb earnings management through tax expenses. The results of this study can shed light on the link between loss avoidance and earnings management through tax expenses, as well as the effect of corporate governance on this link. This study contributes to the current earnings management literature by providing novel empirical evidence on the use of a specific method, reduction of tax expenses, to manage earnings.