Tax Accounting and Corporate Decision Making

Tax Accounting and Corporate Decision Making

The German Accounting Law Modernization Act (BilMoG) of the year 2010 has been one of the most important reform acts in Germany in the last years and has constituted a change in paradigm with regard to the traditionally close relationship between financial and tax accounting. The abolishment of the reverse authoritative principle has implied the movement from a so-called one-book system towards a more two-book oriented system with two independent sets of accounting rules, whereas in the US a discussion on a stronger alignment of the two sets of accounts has been going on for many years. In that regard, the systemic change in the course of the BilMoG-Act constitutes an ideal and unique framework for research to make contributions to this ongoing discussion. Specifically, based on a unique matched tax return – financial statement dataset for the tax years 2008 to 2012, provided by Ernst & Young Germany, we aim to contribute to various research questions in the field of Tax Accounting. These in particular include the question whether the mandated change in book-tax conformity has altered German corporations’ reporting behavior, for instance with regard to earnings management or tax sheltering. 

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Baden-Württemberg, Stuttgart, DE // Leibniz Association, Berlin, DE

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