Business, Management and Accounting
4 years ago

Belgian business groups manipulate earnings for tax benefits and control.

The International Journal of Accounting
Earnings Management in Business Groups: Tax Incentives or Expropriation Concealment?
Christof Beuselinck, Marc Deloof

Paper Summary

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Belgian firms in business groups manage their earnings more than stand-alone firms. Fully owned group firms do more earnings management than group firms with minority shareholders. Controlling shareholders can manipulate earnings more easily when it won't harm minority shareholders. Group firms adjust earnings to take advantage of tax benefits. Earnings management is often done through transactions within the group.