INFLUENCE OF BOOK TAX GAP TOWARDS EARNINGS PERSISTENCE AND FIRM VALUE FOR THE PERIOD OF 1999 – 2007

The 3rd Accounting & The 2nd Doctoral Colloquium
Bridging the Gap between Theory, Research and Practice :
IFRS Convergence and Application
Faculty of Economics Universitas Indonesia
Bali-Indonesia, 27 - 28 Oktober 2010

TAX01
INFLUENCE OF BOOK TAX GAP
TOWARDS EARNINGS PERSISTENCE AND FIRM VALUE
FOR THE PERIOD OF 1999 – 2007

Dwi Martani
Universitas Indonesia
([e-mail])
Debby Fitriasari
Universitas Indonesia
([e-mail])
Yulianti
Universitas Indonesia
([e-mail])

Field of Research : Taxation

Organized by :
Department of Accounting FEUI
Center For Accounting Development FEUI
Post Graduate Program in Accounting FEUI
Master in Accounting Program FEUI
Profession Education Program in Accounting FEUI

The 3rd Accounting & The 2nd Doctoral Colloquium
Bridging the Gap between Theory, Research and Practice :
IFRS Convergence and Application
Faculty of Economics Universitas Indonesia
Bali-Indonesia, 27 - 28 Oktober 2010

ABSTRACT

The purpose of this research is to prove whether Book Tax Gap (BTG) performed by companies listed in Indonesian Stock Exchange (excluding finance companies) during the period of 1999-2007 has influence towards earnings persistence and firm value. The analysis of BTG influence towards earnings persistence uses three models and the analysis of BTG influence towards firm value uses also three proxies of firm value.
The first model of earnings persistence is confirmed that only companies with large negative BTG has lower earnings persistence compared to companies with small BTG.
However, for companies with large positive BTG, the influence of BTG is not proven. The result of the second and the third analysis of earnings persistence show that BTG do not have influence towards pre tax book income and net profit changes.
In analyzing BTG influence towards firm value, this research provides evidence that BTG has influence towards future performance which was measured by future cash

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