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

2014-2017 is explored, and a system of two simultaneous equations model is estimated with the two-stage least square method, to determine the influence of the amount of tax liability on the manipulation of accounting information, and vice-versa. This research sheds some light on this link in the African context in general and in Cameroon in particular. In what follows, the paper first discusses Cameroonian taxation and the manipulation of accounting data separately. Successively the link between these two elements is scrutinized through a review of existing literature. Afterwards, the article goes through the data of the study and the specification of the model. Finally, the empirical results are presented, followed by their discussion. II. T axation and A ccounting D ata M anipulation: A R eview of the L iterature Taxation and accounting manipulation have been widely discussed in the financial literature. Agency, information asymmetries, stakeholder, positive accounting, ethics and tax theories are the most widely used. Based on these theories and on empirical work, we attempt to highlight the relationship between taxation and accounting manipulation in the Cameroonian context. a) Cameroon's Tax System: The Main Victim of Firms’ Asymmetries of Information Taxation is an economic and social policy instrument available to the state to generate financial resources in the form of tax revenues (James, 2009). It is generally implemented within the framework of a highly regulated tax system, but characterised by a high degree of uncertainty. Indeed, the tax system is highly exposed to moral hazard situations arising from the opportunistic behaviour of taxpayers to whom the State grants a presumption of probity (Jarillo and Bidault, 1995). For this reason, several countries, such as Cameroon, propose a declarative tax system that allows taxpayers to file a declaration of their taxable income on their honour. This declaration then benefits from a formal presumption of sincerity. However, any rational economic agent aims, in the first place, to maximise his utility function. He may then adopt an opportunistic behavior that ultimately confers an uncertain character to the tax return (Amara, Amar, and Jarboui, 2013). To remedy such situations, tax authorities reserve the right to examine/analyze these returns, with the aim of certifying their veracity. In addition, the State grants the firm (taxpayer) a certain delegation of power to collect taxes. The relationship studied can thus be analysed through the prism of agency theory. Like any agency dilemma (Jensen and Meckling, 1976), the relationship between the State and the company is characterized by a conflict of interest (Boatright, 1992). It therefore has an opportunistic character (Dechow and Skinner, 2000) made possible by the information gap available to the company (Akerlof, 1970). The opportunistic behavior, which characterizes the manager in tax matters, is also in line with the positive accounting theory (Watts and Zimmerman, 1990) which enshrines the prevalence of self-interest in the decision-making process. It is therefore possible that the manager, when producing accounting and financial information, is at odds with the fundamental principles and concepts of accounting. The latter strongly prescribe ethics (Colasse, 1997). Ethics in accounting requires the manager to make good moral choices in the preparation, presentation and disclosure of financial information (Freedman, 2019). Thus, the methods of preparing accounts with tax implications, among others, the manager must adopt them in accordance with the accounting standards in force. However, tax audits by the tax authorities take place ex-post. The manager can therefore deviate from the requirements of compliance and ethics by concealing the truth about the company's real situation. In effect, the manager uses all the information at his discretion, and exploits the flexibility of accounting principles, in order to obtain an advantageous tax base. The higher the basis of calculation, the higher the level of tax paid. On the other hand, when the calculation basis is too low or non-existent, the manager will insist that the tax authorities apply their statutory role of auditing tax returns. This verification is carried out through various controls, the exercise of which is provided for in the tax procedure book. Although the tax administration has control mechanisms that can reduce the information gap that benefits the taxpayer, it is still difficult to eliminate opportunistic behaviour by managers. The cases of accounting data modification (Özevin, 2020) continue to feed the suspicion of unreliable financial information. These modifications are the result of creative accounting, earnings management, earnings stabilization and sometimes aggressive accounting practices. All these typologies of manipulation of accounting figures are aimed at creating a certain picture of the company's financial situation (Safta, Achim and Borlea, 2020). Yet, the purpose of accounting is generally to provide stakeholders with relevant information for management, control and decision making. In view of the above, it is worth considering the relationship between the tax burden and the manipulation of accounting data. The former is what the manager wants to avoid, and the latter is the strategy used by the manager to achieve its objective. Taxation and Accounting Data Management: An Empirical Study in Cameroon 68 Global Journal of Management and Business Research Volume XXII Issue II Version I Year 2022 ( )D © 2022 Global Journals