New publication in the Review of Accounting Studies!

In the article “Earnings Management around the Tax Cuts and Jobs Act of 2017”, Max Pflitsch, together with co-authors from the Wisconsin School of Business and the Technical University of Munich, examines how companies are responding to the reduction in the US corporate tax rate. The focus is on the extent to which companies deliberately employ various forms of earnings management to optimise both tax and accounting incentives. The study shows that companies use real economic measures (“real activity manipulation”) to shift taxable profits into the low-tax period following the reform. Overall, the companies examined save between 9.1 and 11.0 billion US dollars in taxes as a result. At the same time, the study provides evidence that the companies concerned are making greater strategic use of accounting policies to reduce the reporting of lower profits during the high-tax period. Click here for the article: https://link.springer.com/article/10.1007/s11142-026-09946-3