The objective of this study is to consider if the value-relevance of recognised deferred tax assets, which often represent unused tax losses, was affected by the financial crisis. A regression analysis of a sample of Australian and United Kingdom firms reveals that the value-relevance of recognised deferred tax assets was affected by the financial crisis. However, the impact of the financial crisis differed between the sample countries. The study shows that a plausible explanation for this difference might be found in the tax law of the two countries. Findings of this paper will be of interest to regulators and standard setters, as they highlight how interaction between accounting requirements and tax law affects the relevance of accounting and tax information.

Prior research considers limited elements of the summarised financial information disclosed for equity accounted associates under IAS 28. Moreover, prior research does not consider the collective or incremental value-relevance of these disclosures. This study investigates the incremental value-relevance of all the required elements of disclosed summarised financial information for listed associates and controls for disclosed fair values. Findings suggest that individual elements of disclosed summarised financial information are sometimes incrementally valuerelevant, but that the elements have the greatest incremental value-relevance as a group.These findings imply that investors value a firm's investments in listed associates at a self-developed intrinsic value, rather than using the market value (fair value) of that associate directly. By extension, underlying accounting information of listed associates remains value-relevant, even when alternative market-based valuations are available.

Background: The value of equity investments depends to some extent on the tax consequences for investors. When groups of investors have different tax preferences, this can lead to conflicting pressures on firms to either retain earnings or pay dividends. The findings of this study will be of interest to researchers of taxation and corporate governance alike, as they highlight the role that corporate shareholders play in the decisions of the firm. Investors and regulators will also be interested in the findings as they reveal more about the interaction between shareholders with conflicting interests. Lastly, changes in behaviour as a result of changes in tax legislation are of interest to those with fiscal responsibility.Setting: A 2012 dividend tax change in South Africa, which simultaneously altered the tax preferences of individual and corporate investors, provides a unique opportunity to investigate firms’ reaction to their investors’ tax preferences.Aim: This article seeks to determine whether firms respond to changes in their investors’ tax preferences in their decisions to either retain earnings or pay dividends.Method: The article investigates the responses of firms to the 2012 dividend tax change using multivariate regressions.Results: Findings show that firms consider changes in the tax preferences of their investors in setting dividend policies. In addition, it appears that corporates have greater success in lobbying for beneficial dividend changes than individuals.Conclusion: Changes in investors’ tax preferences impact on firms’ dividend policy decisions. These decisions ultimately affect the value of the firm to its investors

Abstract:As the overview of the current state of research within this paper shows, the debate around fair value measurements is far from over. This paper analyses fair value measurement requirements in a controversial scenario, namely when a control premium exists. The analyses of the paper show that, while measurement rules around control premiums could have a material impact on fair value measurements and the financial statements as a whole, significant fair value measurement issues remain unresolved.The conclusion is that fair value measurements should include or exclude control premiums consistently. It is argued that including control premiums for all fair value measurements is the most faithful representation of the underlying economic phenomenon. This paper contributes to the fair value measurement debate by comparing the merits of alternative fair value measurements for control premiums and highlights an area where researchers, investors and other users should exercise caution when evaluating financial statements.

Summary at a glance: This paper examines the value-relevance of equity accounted carrying amounts and disclosed fair values of investments in listed associates. It finds that investors determine an intrinsic value for investment in listed associates and that the alternative measurement bases are incrementally value-relevant as a result.