ANALYSIS OF DETERMINANTS OF BOOK-TAX DIFFERENCES: EVIDENCE FROM FRENCH LISTED COMPANIES

The key objective of our research paper consists of consulting the set of explicative factors relative to book-tax differences within the French context especially after the mandatory adoption of international accounting standards, IAS/IFRS, by listed companies. Attributing several regulatory and empirical arguments in a special framework, the focus was on factors linked with non-discretionary (or regulatory) book-tax differences (goodwill and other intangibles assets, income or loss associated to the equity method as well as to the minority interest and deferred tax) and factors linked with discretionary book-tax differences (earnings management and/or tax management). Considering a panel of 1120 observations, the analysis of regression showed that tax management through downward earning management apprehended by discretionary accruals positively affects discretionary book-tax differences. Besides, tax management practices combined with earnings management via institutional ownership negatively affected discretionary differences. Moreover, the tax management policy practiced by companies measured by the effective tax rate reduced the level of discretionary book-tax differences. The current study shed light on whether various factors could affect book-tax differences via a multi-theory framework. Indeed, book-tax differences play a remarkable role in informing not only fiscal authorities but also external investors in the real financial situation of the company. To my mind, this study represented the first analysis aiming to explore determinants of book-tax differences in the French context particularly in the consolidated accounts of listed companies.