ABSTRAK
The purpose of this study is to investigate whether the Deferred TaxExpenses analysis can be employed to detect earnings management in IndonesianCapital Market. This study also compares the deferred tax expenses method andthe accrual method as the proxy of Earnings Management. This study finds thatdeferred tax expenses and the accrual measures (using Total Accruals model,Modified Jones Model and Forward Looking Model) have positive and significantimpacts on the probability of earnings management to avoid !asses. It means thatthe bigger the value of Accrual and Deferred Tax Expenses the bigger theprobability of earnings management practices. Of the three models used, thedeferred .Jax expenses variable has similar significances compared to totalaccrual model and higher significances compared to the discretionary accrualmodels. This shown that deferred tax expenses can be used as an alternative toAccrual Models in explaining the earnings management phenomena around theearnings threshold. In the additional study, we find that factors affected earningsmanagement can't explain the variation of Deferred Tax Expenses. Meanwhile itcan be used to explain the three-accrual models significantly. This findingsuggests that the use of deferred tax expenses as a proxy in earnings managementis still in doubt. |
