One-Book Versus Two-Book System: Learnings from Europe

Watrin, Christoph; Ebert, Nadine; Thomsen, Martin

doi:10.2139/ssrn.2111517

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One-Book Versus Two-Book System: Learnings from Europe

52 Pages Posted: 18 Jul 2012 Last revised: 19 Jul 2012

See all articles by Christoph Watrin

Christoph Watrin

University of Muenster - Accounting Center; University of Muenster - Accounting Center

Martin Thomsen

University of Münster

Date Written: July 17, 2012

Abstract

Despite ongoing debates about the effect of book-tax conformity on earnings management in consolidated statements, there is a paucity of evidence from Europe, where both one- and two-book systems occur. In this study, we examine the influence of one- and two-book systems on earnings management using the consolidated statements of 11,694 European firm-years from 2004 to 2009. We find that firms in a one-book system show significantly more (downward) earnings management in consolidated statements compared with those in a two-book system.

Keywords: One-Book System, Two-Book System, Book-Tax Conformity, Earnings Management

Suggested Citation: Suggested Citation

Watrin, Christoph and Watrin, Christoph and Ebert, Nadine and Thomsen, Martin, One-Book Versus Two-Book System: Learnings from Europe (July 17, 2012). Available at SSRN: https://ssrn.com/abstract=2111517 or http://dx.doi.org/10.2139/ssrn.2111517