How Environmental Protection Tax Affect Corporate Earnings Management——Evidence from Chinese Manufacturing Industry Enterprises

Abstract

This paper empirically explores the influence of environmental protection tax on corporate earnings management and the underlying mechanism based on the data of manufacturing enterprises listed on A-shares in China from 2007 to 2021. The results show that environmental protection tax has a remarkable inhibitory effect on corporate earnings management, and the positive moderating effect of green innovation and the negative moderating effect of media attention are examined through mechanism analysis. The heterogeneity analysis finds that this effect can differ significantly depending on the nature of ownership, social responsibility, and environmental pollution, and through further research, it is discovered that the environmental protection tax has a more significant inhibitory influence on upward earnings management.