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The research investigates the relationship between corporate tax rates and management's accounting choices aimed at maximizing compensation.

The Choice Among Accounting Alternatives and Management Compensation: Effects of Corporate Tax.

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The research investigates the relationship between corporate tax rates and management's accounting choices aimed at maximizing compensation.
Developed a stylized model to illustrate the impact of corporate tax on accounting choices.
Examined the link between compensation and accounting earnings under varying corporate tax rates.
Applied logit analysis to empirical compensation data to test model implications.
Increased corporate tax rates lead to a preference for income-increasing accounting treatments by management.
Empirical analysis supports the model's prediction regarding the relationship between tax rates and accounting choices.

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Analysis shows that corporate tax influences accounting decisions to optimize management compensation, suggesting financial strategies.

Ronen et al. (1989) studied this question.

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