the OLS analysis of panel data shows that the extent of net income differential and net income differential as a percentage of sales are driven by both capital intensity and the degree to which companies embrace JIT philosophy. Although the
results in Yongvanich (2013) indicate that inventory adjustment retains its significance, this study shows that its impact is much less than that of capital intensity, which is affected by long-term investment decisions. While it is usually indicated
in the accounting literature that JIT philosophy plays an important role in reducing net income differential, this study highlights the impact of capital intensity on net income differential, which has not been referred to as widely as that of JIT
philosophy. Additionally, there are many other ways to infl uence net income being reported