The financial accounting regulations in Norway have not been motivated by corporate income taxation. Nevertheless, historically there has been a close relationship between financial accounting and income taxation. As a general taxation rule, the reported financial income has been the basis for...

We show that if taxable income were linked to accounting income, there will exist an automatic safeguard against manipulation of earnings within the analysed framework. Separating taxable income from accounting income will remove this self-controlled mechanism, and accordingly create a need for...