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

Future Business Journal

Table 5 Earnings and its components/German companies ACC_ip/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%
Estimated	α_1i	0.052	−0.196	0.042	0.295
t-statistic		0.095	−0.303	0.095	0.485
Estimated	α_2i	−0.042	−0.394	−0.046	0.325
t-statistic		−0.003	−0.361	−0.003	0.359
Estimated	α_3i	−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

Source: Author work
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