Zarządzanie dochodami a uchylanie się od opodatkowania przez spółki notowane na Warszawskiej Giełdzie Papierów Wartościowych w świetle teorii perspektywy
Earnings Management and Tax Avoidance in Companies Listed on the Warsaw Stock Exchange in the Light of Prospect Theory

Summary/Abstract: The objective of this article is to determine whether the level of effective tax rates among Polish non-financial companies listed on the Warsaw Stock Exchange (WSE) is affected by their engagement in earnings management practices. This analysis aims to assess whether entities that manipulate their accounting earnings simultaneously adopt strategies aimed at minimising their corporate income tax burden. The existence of such a relationship is theoretically grounded in the Prospect Theory, which provides an explanatory framework for both financial statement manipulation and tax avoidance behaviour. Demonstrating a relationship between earnings management and tax avoidance would provide a compelling argument in favour of harmonising the principles governing financial accounting and tax reporting. Panel data models were employed to evaluate the impact of earnings manipulation on the effective tax burden. The research sample comprised 277 non-financial enterprises, with the observation period covering the years 2014-2021. A novel feature of the study is the application of a custom-built model of effective taxation, in which the explanatory variable, M-score is calculated according to the Roxas model (Roxas, 2011). Unlike previously applied approaches, this method captures not only real earnings management but also accrual-based earnings management, which involves accounting-based manipulations. The findings of the study are particularly relevant in the context of assessing discrepancies between financial and tax accounting systems and in evaluating the rationale behind calls for unifying the rules for determining taxable income and accounting profit.

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