Global Journal of Management and Business Research, D: Accounting and Auditing, Volume 22 Issue 2

Taxation and Accounting Data Management: An Empirical Study in Cameroon Keywords: taxation, accounting data management, discretionary accruals, effective tax rat e. I. I ntroduction he manipulation of accounting data is a research object frequently addressed in management science insofar as financial information is an important element of decision making (Khoufi, 2021). The link between management of accounting data and taxation is one of the most invested lines of research in this literature (James, 2009; Egbunike and Ezelibe, 2015; Vokshi, 2018). A part of the work on this link has attempted to determine the impact of the tax burden on the production of accounting information reflecting the real situation of the firm, by contrasting tax rules and accounting rules (James, 2009), tax liability versus accruals (Daoud and Omri, 2013), or tax pressure and the ethical behaviour of producers of accounting and financial information (Djeudja and Tedomzong, 2017), etc. One fact nevertheless marks this literature on the link between taxation and the manipulation of accounting data. The tax burden is often presented as a catalyst for earnings management; the accounting result being the basis for calculating the tax to be borne by the company (Kasraoui and Naoui, 2019). Other elements such as taxes or social security contributions explain the cosmetic nature of the turnover and operating expenses. However, the tax-related factors that affect the behavior of the producers of financial and accounting information can be both internal and external to the company. The Author α σ : University of Douala – ENSET. e-mails : abmarius@hotmail.com, larissabitoutou83gtmail.com internal factors relate primarily to management, while the external factors relate to government policies. Nevertheless, the debate on the relationship between taxation and the manipulation of accounting and financial data is marked by the contextual realities of the moment. In the years (2009-2010) that marked the implementation of the 2035 emergence plan (Okouda, 2017), this debate was more focused on the opposition between government policies and the transparency of financial and accounting information provided by firms. Indeed, public decision-makers in search of resources to finance state investments are increasing the tax burden in order to obtain maximum revenue on the one hand. On the other hand, the enterprises, in their drive to reduce costs, are seeking and developing ways to reduce the tax burden (Breton and Schatt, 2006). In developing countries, especially sub-Saharan Africa ones, the tax revenue represents the main source of governments’ funding. Yet, so far, the plurality of empirical works on the subject has mainly aimed to assert the catalytic role of tax burden in managers' decision to manipulate information. An illustration is the works of Djeudja and Tedomzong (2017), Bimeme and Um(2018),and Tachouola (2019) in the Cameroonian context, where the tax revenues financed almost 59 percent of the government budget in 2020 (Kamdem, 2021). However, this literature has very little to do with the link between taxation and the manipulation of accounting data. Thus, exploring this relationship appears to be of prime importance for the corporate tax collection issue. The objective of this paper is to empirically analyse the relationship between taxation and the manipulation of financial and accounting information produced by firms in Cameroon. The main question is whether there is a significant two-way relationship between firms' tax burden and the cosmeticity of financial and accounting information. The economic rationale behind this questioning is that, on the one hand, a government’s onerous corporate tax policy may incite managers to operate a downward manipulation of their firm’s income before taxes in order to pay the least amount of tax on profit possible. On the other hand, with the aim of maximizing the shareholders’ value (Denglos, 2008), managers could manipulate the elements of the calculation of the effective tax rate. The paper also try to find out whether this relationship is linear. Thus, a sample of 1474 Cameroonian firms over the period T 67 Global Journal of Management and Business Research Volume XXII Issue II Version I Year 2022 ( )D © 2022 Global Journals Abstract- This paper analyses the relationship between taxation and accounting data management in the Cameroonian context, based on a sample of 1474 firms in the period 2014-2017. This link is estimated using a simultaneous equation model which allows us to highlight the reciprocal influence between the two variables. The results show that fiscal pressure has a positive two-way effect on discretionary accruals, although this relationship is negative in large companies. The findings also show a non-linear relationship between discretionary accruals and effective tax rate. It is concave in small and medium-size enterprises. That is, at low levels of effective tax rate, the relationship is positive; it becomes negative at higher levels. Conversely,it assumes a U- shape form in large companies; meaning that, at low levels of effective tax rate the relationship is negative, becoming positive at higher levels. Marius Ayou Bene α & Marthe Bitoutou σ