Abstract

PurposeThe reasons why a company may engage in earnings management (EM) practices are varied and do not necessarily respond to the fact of committing financial fraud, which may be either to smooth revenues, meet certain goals, avoid financial difficulties or have regulatory motivations. Our study will address the effect of income tax assessment on EM levels, measured according to each company's discretionary accruals per year.Design/methodology/approachWe use a sample of 125 companies from Argentina, Chile, Colombia, Peru and Mexico (Pacific Alliance) listed in the general index of each country. Using various controls widely recommended in the literature, we incorporate the effect of the 4 largest audit firms (BIG4) in a panel data format for more than 20 years.FindingsOur results indicate that income tax has a positive and significant relationship with discretionary accruals, as well as being audited by one of the BIG4 negatively influencing a firm's EM practice. With respect to controls, Return on Assets (ROA) and dividends paid have a positive and statistically significant effect on discretionary accruals.Originality/valueOur study contributes to policy makers and regulators to make better decisions regarding the control of tax evasion or avoidance, given its incidence on the tax collection of each country, as well as the eventual public policies that can be adapted and created to reduce these effects. According to our understanding, there are no similar studies in emerging countries. Prop & oacute;sitoLos motivos por los que una empresa puede incurrir en pr & aacute;cticas de Earnings Management (EM) son variados y no necesariamente responden al hecho de cometer fraude financiero, lo que puede darse ya sea con un fin de suavizar los ingresos, cumplir determinadas metas, evitar dificultades financieras, o bien tener motivaciones de car & aacute;cter regulatorio. Nuestro estudio abordar & aacute; el efecto de la determinaci & oacute;n del impuesto a la renta sobre los niveles de Earnings Management, medidos de acuerdo con los devengos discrecionales de cada empresa por a & ntilde;o.Metodolog & iacute;aEmpleamos una muestra de 125 empresas de Argentina, Chile, Colombia, Per & uacute; y M & eacute;xico (Alianza Pac & iacute;fico) que cotizan en el & iacute;ndice general de cada pa & iacute;s. Empleando diversos controles ampliamente recomendados en la literatura, incorporamos el efecto de las 4 empresas auditoras m & aacute;s grandes (BIG4), en un formato de datos de panel por m & aacute;s de 20 a & ntilde;os.HallazgosNuestros resultados indican que el impuesto a la renta tiene una relaci & oacute;n positiva y significativa con los devengos discrecionales, as & iacute; como el ser auditado por una de las BIG4 influye negativamente en la pr & aacute;ctica EM de una empresa. Respecto a los controles, el ROA y dividendos pagados tienen un efecto positivo y estad & iacute;sticamente significativo en los devengos discrecionales.OriginalidadNuestro estudio contribuye a que entes normativos y reguladores tomen mejores decisiones en cuanto al control de la evasi & oacute;n o elusi & oacute;n tributaria, dada su incidencia sobre la recaudaci & oacute;n fiscal de cada pa & iacute;s, as & iacute; como las eventuales pol & iacute;ticas p & uacute;blicas que pueden ser adaptadas y creadas con el fin de aminorar estos efectos. De acuerdo con nuestro entendimiento no existen estudios similares en pa & iacute;ses emergentes.