Book-tax conformity in Polish private companies
Book-tax conformity in Polish private companies

Summary/Abstract: The purpose of this paper is to identify whether financial income differs significantly from the tax base inPoland and what determines these differences between accounting and taxable results in Polish privateentities that are not listed on the stock exchange. In this paper, besides examining the level of book-taxconformity in Poland, we investigate the determinants of book-tax differences in the one-book and two-book accounting systems, with deferred income tax. We use the single factor ANOVA variance analysis,robust fixed effects estimator and the fixed effects linear model with an AR(1) disturbance estimator forpanel data of 26,657 private limited liability and non-public joint-stock companies for the period of2003–2014 (177,667 firm-year observations). The originality of this paper results from the deep quantita-tive analysis of the determinants of book-tax conformity on a novel dataset of Polish private firms. Weconfirm a strong significant influence of tax law on the shape of the one-book accounting system inPoland. Larger enterprises show fewer book-tax differences. Book-tax conformity is lower in privatecompanies that incur financial losses and in private companies conducting the one-book accountingsystem. Family-owned companies have higher mean and median book-tax conformity than businessgroups members, due to higher demand for information from their accounts to support stewardship func-tions and to monitor the activities of the management board in the business groups.

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