scholarly journals Financial accounting for deferred taxes: a systematic review of empirical evidence

2021 ◽  
Author(s):  
Anna Görlitz ◽  
Michael Dobler
Keyword(s):  
Empirical Evidence ◽  
Value Relevance ◽  
Relevant Information ◽  
The Body ◽  
Financial Accounting ◽  
Future Research ◽  
Deferred Taxes ◽  
Accounting Regulation ◽  
The Us ◽  
Deferred Tax

AbstractDeferred taxes—resulting from differences between financial and tax accounts—have been a long-standing, contentious issue in financial accounting regulation, practice, and research. Debates on concepts and standards have been accompanied by doubts around whether and the extent to which deferred taxes provide relevant information for financial statement users and are employed by firms to manage their earnings. This paper systematically reviews the body of empirical evidence that has emerged over the last three decades on deferred taxes in the fields of value relevance and earnings management. A bibliographic analysis and a narrative synthesis are presented within a thematic categorization framework. Key results indicate that existing research focuses on the US setting. There is substantial evidence for the value relevance of various deferred tax items but limited evidence that firms use deferred taxes to manage their earnings. The findings suggest implications for both future research and the regulatory debate.

scholarly journals Earnings Management Through Deferred Taxes Recognized Under IAS 12: Evidence From Pakistan

2014 ◽  
Vol 3 (1) ◽  
pp. 1-19
Author(s):  
Abdul Rafay Abdul Rafay ◽  
Mobeen Ajmal
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Value Relevance ◽  
Relevant Information ◽  
Cash Flows ◽  
Deferred Taxes ◽  
Deferred Tax Assets ◽  
Operational Activities ◽  
Deferred Tax ◽  
Relevant Component

This study examines earnings management through deferred taxes calculated under the IAS 12 and its impact on firm valuation. The literature finds that book–tax nonconformity leads to better earning quality and a greater association between earnings and future expected cash flows. Given that Pakistan is a pioneering implementer of the International Financial Reporting Standards, our hypothesis is that the components of deferred tax disclosed under the IAS 12 provide value-relevant information to equity investors. We divide deferred tax components into three categories: those arising from (i) operational activities, (ii) investing activities, and (iii) financing activities. These are subdivided to ensure that no value-relevant component is aggregated with a nonvalue-relevant component, which might otherwise lead to an information slack. Our sample includes data on shariah-compliant companies listed on the Karachi Meezan Index (KMI-30). We find that deferred tax line items in firms’ balance sheets are reflected in market prices. Investors also tend to treat deferred tax line items (arising from operating, financing, and investing activities) differently. Furthermore, the value relevance is dissimilar for different components of deferred tax. Investors are wary of deferred tax assets and liabilities when pricing and are likely to penalize firms with a higher deferred tax position.

scholarly journals Deferred Tax Accounting Concepts and Their Bond to the Accounting Ideologies

2021 ◽  
Vol 8 (4) ◽  
pp. 34-50
Author(s):  
A. A. Aksent’ev
Keyword(s):  
Balance Sheet ◽  
Financial Accounting ◽  
Corporate Management ◽  
Controversial Issues ◽  
Deferred Taxes ◽  
Accounting Standard ◽  
Domestic Practice ◽  
Important Object ◽  
Deferred Tax ◽  
Tax Accounting

Deferred taxes are an important object of accounting observation to judge the degree of discrepancies between financial and tax accounting. Meanwhile, the information discloses to users the effects arising from the tax planning tools usage for corporate management and forecasting cash outflows associated with the payment of income tax in the future. The paper formalized two concepts of accounting for deferred taxes in the form of models: temporary and timing differences associated with accounting ideologies. The author ha structured the logic of reflecting deferred taxes on accounting accounts using the balance sheet and “cost” methods. Analysis of foreign experience and domestic practice made it possible to conclude that there are controversial issues on the assessment of deferred taxes in reporting, including at present value. Also, the author revealed discrepancies in Russian Accounting Standard (PBU) 18/02 which were conceptually different from a similar international standard and conflicting with it in a number of theoretical and methodological positions. The research results are aimed at scientific and practical workers in the field of financial accounting, taxation and audit.

scholarly journals Potential Developmental and Reproductive Impacts of Triclocarban: A Scoping Review

2017 ◽  
Vol 2017 ◽  
pp. 1-15 ◽  
Author(s):  
Johanna R. Rochester ◽  
Ashley L. Bolden ◽  
Katherine E. Pelch ◽  
Carol F. Kwiatkowski
Keyword(s):  
Systematic Review ◽  
Scoping Review ◽  
Estrogenic Activity ◽  
The Body ◽  
Future Research ◽  
Human Populations ◽  
Developmental Effects ◽  
Androgenic Activity ◽  
The Us

Triclocarban (TCC) is an antimicrobial agent used in personal care products. Although frequently studied with another antimicrobial, triclosan, it is not as well researched, and there are very few reviews of the biological activity of TCC. TCC has been shown to be a possible endocrine disruptor, acting by enhancing the activity of endogenous hormones. TCC has been banned in the US for certain applications; however, many human populations, in and outside the US, exhibit exposure to TCC. Because of the concern of the health effects of TCC, we conducted a scoping review in order to map the current body of literature on the endocrine, reproductive, and developmental effects of TCC. The aim of this scoping review was to identify possible endpoints for future systematic review and to make recommendations for future research. A search of the literature until August 2017 yielded 32 relevant studies in humans, rodents, fish, invertebrates, and in vitro. Based on the robustness of the literature in all three evidence streams (human, animal, and in vitro), we identified three endpoints for possible systematic review: estrogenic activity, androgenic activity, and offspring growth. In this review, we describe the body of evidence and make recommendations for future research.

Incremental Value Relevance of Unrecognized Deferred Taxes: Evidence from the United Kingdom

2008 ◽  
Vol 30 (2) ◽  
pp. 107-130 ◽  
Author(s):  
Stephen Gregory Lynn ◽  
Chandra Seethamraju ◽  
Ananth Seetharaman
Keyword(s):  
Value Relevance ◽  
Weighted Least Squares ◽  
Annual Reports ◽  
Deferred Taxes ◽  
Deferred Tax Assets ◽  
Share Prices ◽  
The United Kingdom ◽  
Incremental Value ◽  
Theoretical Predictions ◽  
Deferred Tax

ABSTRACT: We examine empirically whether the use of the partial method for deferred taxes provides incremental information of use to investors. Specifically, we test whether U.K. capital markets valued unrecognized deferred tax amounts reported in the footnotes to U.K. annual reports, pursuant to U.K. Statement of Standard Accounting Practice (SSAP) No. 15 (ASB 1985). Our empirical model is based on Feltham and Ohlson (1995). We run iterative weighted least-squares (IWLS) regression of year-end share prices on a decomposition of book value per share for a pooled sample of U.K. firm-years drawn from the years 1993 through 1998, and find positive associations with price for net deferred tax assets—both recognized and unrecognized. Moreover, we are unable to reject the null hypothesis that both parts of deferred taxes have similar multiples in our price regressions. These findings support some theoretical predictions in Sansing (1998), Guenther and Sansing (2000, 2004), and Amir et al. (2001).

IFRS and value relevance: evidence based on Canadian adoption

2016 ◽  
Vol 12 (2) ◽  
pp. 136-160 ◽  
Author(s):  
Oliver N. Okafor ◽  
Mark Anderson ◽  
Hussein Warsame
Keyword(s):  
Empirical Evidence ◽  
Financial Reporting ◽  
Value Relevance ◽  
Accounting Information ◽  
Sensitivity Analyses ◽  
Evidence Based ◽  
Content Type ◽  
Ifrs Adoption ◽  
The Us ◽  
Us Gaap

Purpose – The purpose of this paper is to investigate whether financial information prepared and disclosed under International Financial Reporting Standards (IFRS) has incremental value relevance vs information prepared under generally accepted accounting principles (GAAP) in Canada. Design/methodology/approach – The authors employ a difference in differences methodology and estimate value relevance using: first, the adjusted R2 of regressions of stock price on book value and earnings; second, the adjusted R2 of regressions of stock returns on earnings and changes in earnings; and third, a time series incremental association return estimation. The authors use multiple models including a model similar to the Ohlson (1995) model and a modified Balachandran and Mohanram (2011) model to investigate value relevance in the period 2008-2013. Findings – The authors provide empirical evidence, based on unique Canadian environment, that accounting information prepared and disclosed under IFRS exhibits higher price and returns value relevance than accounting information prepared previously under local GAAP. Sensitivity analyses and yearly trends regressions produce collaborating evidence. Originality/value – The study provides early empirical evidence that value relevance increases in mandatory IFRS adoption, based on unique Canadian adoption. The Canadian adoption is unique because Canada: first, is the first G7 non-European country to adopt IFRS; second, had pursued a dual strategy of harmonizing with the US GAAP while supporting IFRS convergence; third, provided information environment that mitigates the problems associated with measuring the effects of IFRS adoption in the European countries where IFRS or its predecessor – international accounting standards – had permeated the reporting environment prior to the mandatory adoption in 2005; and fourth, allowed firms listed on the US exchanges to continue to use or adopt the US GAAP for financial reporting and thus, provided a group of benchmark firms drawn from the same social-political and economic environment as the treatment firms. The study clarifies prior inconsistent results from European samples.

Effect of the performance of physical and non-physical facilities on higher institutional facilities

2018 ◽  
Vol 16 (4) ◽  
pp. 374-386 ◽  
Author(s):  
Isa Abdullahi ◽  
Wan Zahari Wan Yusoff
Keyword(s):  
Structural Equation ◽  
Teaching And Learning ◽  
Influencing Factor ◽  
Relevant Information ◽  
Facility Management ◽  
The Body ◽  
Future Research ◽  
Content Type ◽  
National University

Purpose The role of institutional facilities is of paramount importance to ensure quality of teaching and learning with respect to achieving quality of education in any given higher educational institutions (HEIs). The purpose of this paper is to determine the performance of physical and non-physical facilities of higher institutional facilities. Design/methodology/approach The data were collected from respondents using a closed-end questionnaire. In total, 1,000 questionnaires were administered to students and 735 were returned and valid for analysis. Partial least squares-structural equation modelling was adopted for analysis. Findings It was found that the exogenous constructs [physical facilities (PPE) and non-physical facilities (PNE)] scored 32.7 per cent (R2 = 0.327) of the variance of the facility’s performance. It was also found that the physical facility is the most significant factor that determines facility performance. Research limitations/implications This paper is limited to investigating the performance of physical and non-physical facilities; it is not in any way a measure for the students’ views about other services offered by the institutions. Future research is needed to use relevant information from HEIs’ facilities for validating factors that determine the facility’s performance. Practical implications Physical facility was identified as the most influencing factor that determines the facility performance based on the information provided by respondents. This research should help the facility management department at HEIs when designing the academic facility management. The study will also serve as a yardstick for the Federal Ministry of Education, the National University Commission in academic facility accreditation. This paper contributes to both the body of knowledge in facility management by considering the performance of facilities at HEIs. Originality/value This paper demonstrates the duality of HEIs’ facilities into physical and non-physical facilities and their distinct contribution to the overall facility’s performance.

scholarly journals Investors’ Responses on SOE’s Liquidity Risk Disclosures: Case of Indonesia

2021 ◽  
Vol 23 (1) ◽  
pp. 24-32
Author(s):  
Ira Geraldina ◽  
Hilda Rossieta ◽  
Ratna Wardhani
Keyword(s):  
Value Relevance ◽  
Stock Exchange ◽  
Panel Data Analysis ◽  
Liquidity Risk ◽  
Relevant Information ◽  
Financial Accounting ◽  
Risk Disclosure ◽  
Financial Reports ◽  
Before And After ◽  
Risk Disclosures

This study aims to examine the value relevance of liquidity risk disclosure of Indonesia listed state owned enterprises after Indonesia Statement of Financial Accounting Standard, Disclosure of Financial Instruments (Revised in 2010 and 2014). This study uses 20 Indonesia listed state owned enterprises during period of 2012-2017 or 115 firm years as final samples. Using panel data analysis, this study shows that liquidity risk disclosure is relevant information for investors in Indonesia stock exchange. Investors response differently on liquidity risk disclosure before and after the announcement windows period of financial reports. The main contribution of this is examining the value relevance of liquidity risk disclosure of Indonesia listed state owned enterprises.

scholarly journals Lack Of Timeliness, Noise And Transitory Components In Earnings As Explanations For The Apparent Decline In The Value Relevance Of Earnings

2013 ◽  
Vol 11 (12) ◽  
pp. 543
Author(s):  
L. Dwight Sneathen, Jr.
Keyword(s):  
Empirical Evidence ◽  
Recent Literature ◽  
Value Relevance ◽  
Relevant Information ◽  
Over Time

Prior studies identify three factors that contribute to the low contemporaneous association between returns (prices) and earnings: lack of timeliness of earnings capturing value relevant information, noise in earnings, and transitory elements in earnings. This study seeks to identify whether these factors contribute to the observed inter-temporal decline in the contemporaneous association between returns (prices) and earnings documented in recent literature. Prior studies do not explicitly examine the affect of these factors on the inter-temporal decline, and the extant evidence is mixed. Empirical evidence presented here indicates that lack of timeliness of earnings and value-irrelevant noise in earnings have increased over time, both contributing to the documented inter-temporal decline in the contemporaneous association between returns (prices) and earnings.

scholarly journals Continuing Case Against Inter-Period Tax Allocation

2011 ◽  
Vol 7 (6) ◽  
Author(s):  
Ron Colley ◽  
Joseph Rue ◽  
Ara Volkan
Keyword(s):  
Financial Accounting ◽  
Font Size ◽  
Individual Event ◽  
Deferred Taxes ◽  
Accounting Theory ◽  
Deferred Tax ◽  
Definition Of ◽  
The Individual ◽  
The Impact ◽  
Selection Of

<p class="MsoBlockText" style="line-height: normal; margin: 0in 0.5in 0pt;"><span style="font-size: 10pt; mso-bidi-font-style: italic;"><span style="font-family: Times New Roman;">The annual and industry-based behavior of deferred tax balances is analyzed and the accounting theory and procedures required by the FASB are examined in the context of the unit problem. The unit problem involves the selection of the appropriate perspective (either individual or aggregate) for applying measurement and recognition conventions to phenomena of interest. From an individual event perspective, the FASB's conclusions regarding liability recognition are inconsistent with the definition of liabilities found in the Statement of Financial Accounting Concepts No. 6. In addition, the use of inconsistent perspectives by S109 creates disagreements with the FASB&rsquo;s position, where both the individual and aggregate perspectives are used simultaneously as the basis of the FASB's decisions. The impact of eliminating deferred taxes and adjusting the liability and stockholders equity balances on the debt-to-equity (DTE) ratio is computed for each year and 20 industries in the COMPUSTAT database (1997 &ndash; 2006). The change results in significant decreases in DTE each year and in all industries.</span></span></p>

Value relevance of earnings and book values in the Qatari Stock Exchange

2019 ◽  
Vol 14 (1) ◽  
pp. 62-75 ◽  
Author(s):  
Hesham I. Almujamed ◽  
Mishari M. Alfraih
Keyword(s):  
Empirical Evidence ◽  
Value Relevance ◽  
Stock Exchange ◽  
Emerging Market ◽  
Financial Statements ◽  
Future Research ◽  
Content Type ◽  
Valuation Model ◽  
Book Values ◽  
Practical Implications

Purpose The study of developed capital markets suggests that information provided in financial statements has lost its value relevance to equity holders. The purpose of this paper is to explore this issue in the emerging market of Qatar. Design/methodology/approach Following other studies in the literature, the study examines the value relevance of earnings and book values using the price valuation model provided by Ohlson (1995). A total of 215 observations were collected from all firms listed on the Qatari Stock Exchange over a period of five years (2012–2016). Findings This study suggests that the value relevance of both earnings and book values has noticeably decreased over the sample period. However, its results show that the decline in the value relevance of earnings favored book values. Research limitations/implications Like other studies, this one has limitations that suggest areas for future research. For example, in Qatar, like other emerging markets, a lack of data prevents the performance of deep analysis. Additionally, the authors only use Ohlson’s (1995) model as a framework for evaluation. It would be interesting to explore the changes when examining alternative valuation models. Another limitation is that the authors examine only two accounting measures: earnings and book values. Further research could explore changes in the value relevance of other measures, such as cash flow. Practical implications These findings provide empirical evidence regarding the value relevance of earnings and book values in an emerging market. Originality/value To the authors’ knowledge, this paper provides the first empirical evidence regarding the value relevance of earnings and book values in the emerging capital market of Qatar.

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