Abstract

This study investigates whether a proxy of taxable income affects book - tax income difference. Most of studies use net income before tax expense as a book income and there is a unanimity about book income(financial accounting income) measure. But there are not unanimous agreements about tax income measure. An income during each fiscal year, tax base and estimated taxable income(measured by tax burden divided by tax rate) are alternatives of taxable income. This study analyzes three measures about taxable income(income during each fiscal year, tax base and estimated taxable income) and tests whether I will get different results depending on taxable income proxies using Korean data collected from 2000 to 2005. The main results are as follows. First, book - tax income difference of total sample and loss sample is negative but income sample is positive. This result is the same regardless of taxable income proxies. Second, regardless of taxable income proxies, the distribution of book - tax income difference is similar and correlation coefficient of three taxable income proxies is very high. Finally, regression results using three taxable income proxies are very similar. These results suggest that there is no differences in research output regardless of taxable income proxies and support that previous research results are reliable. The contributions of my research are to discuss about taxable income measure and to confirm that there is no problem on using of different proxies.

Keywords

• book income
• taxable income
• income during each fiscal year
• tax base

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