This paper's main objective is to examine the effect of corporate governance on earnings manipulations using BTD proxy. We investigate whether ownership structure board and audit committee characters affect earnings and tax management. Based on a sample of 21 corporations listed on Tunisian stock market during the period 2003-2012, our study employs regression analysis to test the prediction that the governance attributes reduces the likelihood of earnings and tax aggressiveness. We find that the ownership structure is an important corporate governance mechanism that affects BTD. We find that BTD does not vary with board size and the cumulative effect of the function of chief executive and president of the board. We find that the percentage of outside directors is associated with managerial discretion. Finally, we find that the audit committee influences ABTD through the variable relating to the financial expertise of the committee.

In this study, we examine empirically whether the gap between the pre-tax income and the taxable income predicts simultaneously earnings management and tax management. Prior researches have begun to estimate several indictors of earnings quality. We extends this works by investigating whether the book-tax differences (BTD) provides information about managerial discretion. BTD can be used as an attribute of information quality and can contain incremental information for investors and users of financial reports of companies We compose a sample of 21 listed Tunisian firms over the 2003-2012 periods, we apply a statistical methodology implementing a linear panel regression. We develop a model in which we estimate abnormal BTD. All earnings and tax management activities are captures by our abnormal BTD indicator (ABTD). From this regression we are going to test the effect of the variables of the earnings and tax management on the ABTD variable. We find, as expected, a significant association between BTD and manager discretion proxies. Our results indicate that BTD contains a predictive power over the earnings and tax management. We find that Tunisian companies are concerned about tax reducing rather than improved information quality and increasing the financial result.

<p>This study aims to investigate whether the persistence of earnings, accruals and cash flows are influenced by the difference between accounting and taxable income (book-tax differences; BTD). This investigation helps in two research lines. First we have expanded the literature that interprets the BTD. We used the discretionary part of the BTD to estimate managerial manipulation. Our contribution is to use a different method to estimate the BTD through the residual of a multiple regression. Secondly, we attempted to investigate whether discretionary BTD appear to serve as a useful signal of earnings persistence. We test the model with a sample of 21 listed Tunisian firms in the period from 2003 to 2012. The results illustrate the importance of BTD in indicating the persistence of earnings and accruals.</p>

The relationship between tax and financial reporting has deferred widely over time. The connection between accounting and taxation can provide negative effects; such as earnings management for fiscal purposes and value relevance distortion. This leads to an optimal and efficient looking on the nature of the relation that should bring them together. Few studies have focused on this relationship in some countries, but no research has been applied in the context of Tunisia using an empirical model. In this paper, we analyze within this framework the Tunisian case. We specified a longitudinal dimension of tax and financial reporting association through the separation of two periods of evolution. We collected information about the different accounting and fiscal treatments of seventeen substantial accounting topics from 1968 to 2013, and we assessed them using five cases of connection or disconnection. The results show that even in the case of the lack of accounting standards, there is a total disconnection between accounting and taxation in Tunisia. We also found that the relationship between accounting and taxation in this country was a typical of continental European countries before accounting normalization. After the Tunisian accounting system implementation, the nature of this relationship has changed to the Anglo-Saxon system.