Does book-tax difference matter? An analysis of relation with earnings persistence

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Observational analysis shows book-tax difference negatively affects earnings persistence in firms, implying differing impacts on cash flows.

BTD negatively influences earnings persistence; higher BTD correlates with lower earnings stability.
The analysis involved 335 companies from 2000 to 2019, highlighting significant trends in financial reporting.
Econometric methods based on the model proposed by Dechow and Schrand were employed to assess relationships.
This research indicates that cash flows are more persistent than accounting earnings during the observed period.

Rodrigues et al. (2022) studied this question.

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Observational analysis shows book-tax difference negatively affects earnings persistence in firms, implying differing impacts on cash flows.