This study examines whether capital tax incentives entail unintended costs for information quality. Exploiting the staggered expansions of China's accelerated depreciation policy for fixed assets in 2014, 2015, and 2019 as a quasi-natural experiment, we use A-share listed firms from 2011 to 2024 and apply a staggered difference-in-differences design with event-study tests for parallel trends. The results show that the policy significantly increases accrual-based earnings management. Further evidence indicates that the policy raises earnings management by releasing tax-shield cash flows and easing financing constraints, while external monitoring does not strengthen commensurately. In China's institutional setting of tax-book separation, treated firms exhibitabnormal declines in book depreciation rates, consistent with reporting-oriented earnings management through adjustments to depreciation estimates. Firms also strategically reallocate manipulation tools. Because asset-heavy firms have greater discretion over depreciation estimates, their accrual-manipulation response is weaker; by contrast, asset-light firms face more limited depreciation discretion and exhibit stronger accrual manipulation. Heterogeneity analyses show that these effects are more pronounced among private firms, firms in eastern regions, and younger firms. Overall, the findings reveal that accelerated depreciation can reshape firms'reporting incentives and manipulation strategies while improving cash flows, suggesting that regulators and external auditors should pay closer attention to changes in depreciation estimates and related disclosures.