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

Future Business Journal

Table 4 Earnings and its components/Dutch companies ACC_it/A_t−1 = α_1i 1/A_t−1 + α_2i (REV_t − REC_t)/A_t−1 + α_3i PPE_t/A_t−1 + εit

	Coefficient	Mean	25%	Median	75%
NI Estimated	α_1i	0.0698	−0.6190	0.0699	0.4260
t-statistic		0.1051	−0.6160	0.1091	0.9290
Estimated	α_2i	−0.0376	−0.8770	−0.0449	0.7560
t-statistic		−0.0096	−0.8010	−0.0074	0.5759
Estimated	α_3i	−0.0280	−0.2800	−0.0307	0.2001
t-statistic		0.0795	−0.4600	0.0752	0.8500
Adjusted R²		0.2888	0.0888	0.287	0.3199
Durbin–Watson stat		2.1206	1.1206	2.1206	2.9206

Source: Author work
Total accrual (ACCR) is computed as follows: ACCR = Δ current assets − Δ current liabilities − Δ cash and equivalent + Δ short term debt and current portion of long-term debt + ΔIncome taxes payable depreciations, depletion and amortization