What question did this study set out to answer?

The research aims to determine if corporate earnings are manipulated due to adjustments in statutory tax rates following the Tax Reform Act of 1986.

March 18, 2026

Earnings Management in Response to Corporate Tax Rate Changes: Evidence from the 1986 Tax Reform Act.

Key Points

The research aims to determine if corporate earnings are manipulated due to adjustments in statutory tax rates following the Tax Reform Act of 1986.
Analysis of accounting earnings for American corporations pre- and post-TRA
Examination of changes in statutory corporate income tax rates
Evaluation of earnings management practices in relation to tax reductions
Identified a significant decrease in the maximum corporate tax rate from 46% to 34%
Found evidence of earnings management in response to the tax rate change
Corporations demonstrated shifts in accounting practices aligned with lowered tax liabilities

Abstract

Abstract Investigates whether accounting earnings of American corporations are managed in response to changes in the statutory corporate income tax rate brought about by the Tax Reform Act of 1986 (TRA). Reducing the maximum corporate tax rate from 46% to 34% through TRA; Concept of earnings management in relation to tax rate reductions in the TRA.

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Cite This Study

David A. Guenther (Sat,) studied this question.

synapsesocial.com/papers/69ba43e94e9516ffd37a5a5f https://doi.org/https://doi.org/10.2308/tar-9410256369

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