Abstract: Based on the data of tax credit rating of listed companies from 2014 to 2016, this article examines whether the tax integrity enterprises selected by the State Administration of Taxation are really “honest” or not. The results show that tax integrity enterprises are really “honest”，and they are less likely to manage their earnings: whether the level of positive earnings management or the level of negative earnings management, tax-credit companies are significantly lower. Further research shows that regardless of state-owned enterprises or private enterprises, the level of earnings management of tax integrity enterprises is significantly lower; regardless of the eastern region where the legal system is relatively high or in the central and western regions where the legal system is relatively poor, the level of earnings management of tax-honored enterprises is also significantly lower. The results of robustness show that the auditing fees of tax integrity companies are even lower, which indicates that the “good faith” information of the tax-paying creditworthy companies is obtained by the auditors and is reflected in the audit fees. The conclusions indicate that the construction of the taxation integrity system carried out by the State Administration of Taxation had reached the expected policy goal, and the honest and tax-paying enterprises selected are indeed “honest”.

Key words: tax integrity, earnings management, audit fee