Table 8 Earnings quality for private...

Table 8

Earnings quality for private subsidiary firms versus standalone firms (tax management and earnings manipulation)

Variables	(1)	(2)
Variables	DTA	DWCA
Subs	−0.006***	−0.000
Subs	(0.002)	(0.003)
BTD	0.099***	0.074***
BTD	(0.012)	(0.016)
SubsBTD*	0.037*	0.062**
SubsBTD*	(0.021)	(0.028)
Capneed	−0.000***	−0.000***
Capneed	(0.000)	(0.000)
Size	−0.002***	−0.002***
Size	(0.000)	(0.000)
ROE	0.000	0.000***
ROE	(0.000)	(0.000)
Loss	0.000***	0.000***
Loss	(0.000)	(0.000)
Std_ROA	−0.000***	0.000
Std_ROA	(0.000)	(0.000)
Lev	0.008**	0.010**
Lev	(0.003)	(0.004)
Growth	0.000	−0.008
Growth	(0.002)	(0.005)
Inv	0.065***	0.031***
Inv	(0.004)	(0.006)
Constant	−0.001	0.005
Constant	(0.004)	(0.005)
Year FE	Yes	Yes
Industry FE	Yes	Yes
Observations	54,860	54,508
R-squared	0.014	0.018

Variables	(1)	(2)
Variables	DTA	DWCA
Subs	−0.006***	−0.000
Subs	(0.002)	(0.003)
BTD	0.099***	0.074***
BTD	(0.012)	(0.016)
Subs*BTD	0.037*	0.062**
Subs*BTD	(0.021)	(0.028)
Capneed	−0.000***	−0.000***
Capneed	(0.000)	(0.000)
Size	−0.002***	−0.002***
Size	(0.000)	(0.000)
ROE	0.000	0.000***
ROE	(0.000)	(0.000)
Loss	0.000***	0.000***
Loss	(0.000)	(0.000)
Std_ROA	−0.000***	0.000
Std_ROA	(0.000)	(0.000)
Lev	0.008**	0.010**
Lev	(0.003)	(0.004)
Growth	0.000	−0.008
Growth	(0.002)	(0.005)
Inv	0.065***	0.031***
Inv	(0.004)	(0.006)
Constant	−0.001	0.005
Constant	(0.004)	(0.005)
Year FE	Yes	Yes
Industry FE	Yes	Yes
Observations	54,860	54,508
R-squared	0.014	0.018

Note(s): Subs is an indicator variable for private subsidiary firms. BTD is book tax difference measured as Pre-tax income – (Current tax expense/STR), scaled by lagged total assets. Please see Appendix 1 for detailed variable definitions. All continuous variables are winsorized at the 1st and 99th percentiles. The symbol ***, ** and * denote significance at 1, 5 and 10% levels, respectively. Robust standard errors (clustered at the firm level) are reported in the parentheses

Source(s): Table created by authors'

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