The detection of earnings management through a decrease of corporate income tax

Future Business Journal

Table 1 Book income before tax (BIBT) and taxable income (TI) in the Netherlands and Germany from 2002–2009

Country	Year	N^a	Mean ^b IBTR € million	Mean TI € million	Mean Difference ^c	Ratio of BIBT/TI ^d
the Netherlands	2002	647	6031	6905	−874	0.87
	2003	721	5413	5834	−421	0.92
	2004	650	6124	6735	−611	0.91
	2005	648	6436	6938	−502	0.92
	2006	670	7296	7653	−357	0.95
	2007	621	8163	8762	−599	0.93
	2008	641	8207	8952	−745	0.91
	2009	671	4232	8677	−4445	0.49
Germany	2002	787	7189	7737	−548	0.93
	2003	690	7860	9620	−494	0.82
	2004	796	7930	8424	−494	0.94
	2005	701	8142	8440	−298	0.94
	2006	718	8201	8720	−519	0.96
	2007	750	9179	9669	−490	0.94
	2008	760	4522	4877	−355	0.95
	2009	696	3177	4597	−1420	0.69

Source: Author work
^aThe book income uses before tax and taxable income before corporation enterprise tax
^bThe sample selection started with 1350 and 1850 for Dutch and German listed companies enclosed on the 2000: (1) Company has listed on one of Dutch and German DataStream from 2002 to end 2009, (2) Company has not changed its fiscal year end during the sample period
^cMean difference is computed as mean BTRI less mean TI
^dRatio of BIBT/TI is the ratio book income before tax to taxable income