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Table 5 Earnings and its components/German companies ACCip/At−1 = α1i 1/At−1 + α2i (REVt − RECt)/At−1 + α3i PPEt/At−1 + εit

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

  Coefficient Mean 25% Median 75%
Estimated α1i 0.052 −0.196 0.042 0.295
t-statistic   0.095 −0.303 0.095 0.485
Estimated α2i −0.042 −0.394 −0.046 0.325
t-statistic   −0.003 −0.361 −0.003 0.359
Estimated α3i −0.039 −0.158 −0.037 0.091
t = statistic   0.056 −0.310 0.050 0.450
Adjusted R2   0.336 −0.088 0.334 0.606
Durbin–Watson stat   2.588 2.458 2.568 2.623
  1. Source: Author work
  2. Total accrual (ACCR) is computed as follows: ACCR = Δ current assets − Δ current liabilities −Δ cash & equivalent + Δ current portion of long-term debt + ΔIncome taxes payable depreciations, depletion & amortization. Discretionary accruals (DAC) are determined