Can Other Comprehensive Income be Used for Tax Avoidance?

Kusuma, Marhaendra; Rahayu, Puji

doi:10.9744/jak.24.2.68-79

Cited by 4 publications

(4 citation statements)

References 26 publications

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“…Perubahan signifikan SAK Indonesia setelah konvergen dengan IFRS adalah penyajian aset dan liabilitas pada nilai wajar, karena nilai wajar lebih representatif sesuai kondisi terkini berdasarkan tanggal pelaporan keuangan. Karena disajikan pada nilai wajar, akhirnya muncul selisih antara nilai buku atau nilai tercatat dengan nilai wajar, selisih tersebut diakui sebagai penghasilan komprehensif lainnya (OCI) (Kusuma & Rahayu, 2022;Kusuma, 2023), dan disajikan bersama laba bersih dalam laporan laba rugi. Penjumlahan antara laba bersih dengan OCI disebut dengan laba komprehensif (Kusuma, 2021b;Kusuma & Agustin, 2023;Kusuma, 2023b) .…”

Section: Relevansi Nilai Kepentingan Non Pengendaliunclassified

Relevansi Nilai Kepentingan Non Pengendali dalam Laporan Keuangan Konsolidasi: Bagaimana Pasar Bereaksi dan Kemampuannya dalam Memprediksi Laba dan Dividen?

Kusuma,

Hilda Agustin

2024

JAGo

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Objectives: This study investigates alterations in the presentation of consolidated financial statements concerning profit and equity information associated with non-controlling interests. The primary aim is to establish the significance of attributing value to non-controlling interests and assess the necessity of providing such attribution? Design/method/approach: The research adopts a methodology that verifies the relevance of attributive value by examining the impact of profits and equity attributable to non-controlling interests on stock returns, t+1 comprehensive income, and t+1 dividends. The analysis is conducted using data from 504 companies listed on the Indonesia Stock Exchange (IDX) over the period 2015 to 2021, totaling 3,528 observation data points.Results/findings: The results indicate that net profit, comprehensive profit, and equity attributable to non-controlling interests exhibit value relevance. These findings are substantiated by their significant influence on stock returns, t+1 dividends, and t+1 comprehensive income. Theoretical contribution: This study contributes to the literature by affirming that profit and equity attribution policies possess value relevance. Despite the extended nature of consolidated financial statements, they do not pose difficulties for users in interpretation; instead, they enhance clarity regarding the distribution of profits and equity among different types of owners. Presenting non-controlling interests in a manner that reflects care, transparency, and fairness of information caters to the needs of minority owners. Practical contribution: The study suggests that potential investors with minor shareholdings can predict investment returns more accurately by considering attributable profits and equity rather than aggregate figures.Limitations: This study does not directly examine the impact of profits attributable to non-controlling interests on dividends received by shareholders with non-controlling interests

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Section: Relevansi Nilai Kepentingan Non Pengendaliunclassified

Relevansi Nilai Kepentingan Non Pengendali dalam Laporan Keuangan Konsolidasi: Bagaimana Pasar Bereaksi dan Kemampuannya dalam Memprediksi Laba dan Dividen?

Kusuma,

Hilda Agustin

2024

JAGo

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“…However, dividends are positively affected by OCI items, particularly gains-and-losses on AFS financial assets. Profitability and cash flow mediate the effect of OCI on dividends (Kusuma & Agustin, 2023).…”

Section: Predictability Of Oci and Components Of Oci On Financial Per...mentioning

confidence: 99%

Other Comprehensive Income in the International Financial Reporting Standards: A Literature Review

Nugraha

2024

JAKO

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Research Purposes. This research aims to examine studies regarding investor and contractual profits from Other Comprehensive Income (OCI), as well as its components can provide more evidence regarding whether there are characteristics that differentiate between OCI. Research Methods. This research is research using literature review.The process of reviewing selected articles focuses on understanding the problem, context, complexity and subjectivity of researchers in studying and interpreting OCI’s conceptions and OCI components (and AOCI) and their various relevance that are beneficial to investors in IFRS. Google search, www.semanticcholar.org and onlinelibrary.wiley.com were used to find journal special issues. Research Results and Findings. OCI information and OCI components in the IFRS standard income statement are little use to investors, especially for assessing risk in making investment decisions. Investors should be careful not to overly consider OCI information and OCI components (and AOCI) when making investment decision, including debt contracts.

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“…Reporting entities can perform creative accounting through OCI by 1) delaying (or realizing early) and/or, 2) reducing (increasing) the number of assets realized to get the desired profit value [8], and 3) the flexibility in determining the fair value of assets whose difference from historical values is assessed as OCI, the magnitude of the OCI value will affect the amount of total comprehensive income [45]. So far, no policy regulates the certainty of the timing and amount of assets that are adjusted to OCI, so this loophole can be used to modify net income for tax avoidance purposes [29]. A large and positive comprehensive income can obscure a minimal net income and even a net loss.…”

Section: Relationship Oci With Creative Accountingmentioning

confidence: 99%

Can the Reclassification of Other Comprehensive Income Narrow the Opportunities for Creative Accounting: Earnings Management and Income Smoothing?

Kusuma

2023

jak

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So far, research in Indonesia examines that the factors that influence creative accounting are the application of Good Corporate Governance, leverage, company size, and political connections, while research on the effect of other comprehensive income (OCI) as a result of the application of fair value accounting has not been widely carried out. This study finds evidence that aggregate OCI accumulation does not affect earnings management and income smoothing. However, testing on group OCI items that will be reclassified to net income has a negative effect. Asset realization commitment increases the negative effect of OCI on earnings management and income smoothing. Creative accounting through OCI can be done through a policy of delaying the realization time and or reducing the real amount of assets realized to get the net profit value according to the interests of management and the subjectivity of determining the fair value of assets and liabilities.

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Can Other Comprehensive Income be Used for Tax Avoidance?

Cited by 4 publications

References 26 publications

Relevansi Nilai Kepentingan Non Pengendali dalam Laporan Keuangan Konsolidasi: Bagaimana Pasar Bereaksi dan Kemampuannya dalam Memprediksi Laba dan Dividen?

Relevansi Nilai Kepentingan Non Pengendali dalam Laporan Keuangan Konsolidasi: Bagaimana Pasar Bereaksi dan Kemampuannya dalam Memprediksi Laba dan Dividen?

Other Comprehensive Income in the International Financial Reporting Standards: A Literature Review

Can the Reclassification of Other Comprehensive Income Narrow the Opportunities for Creative Accounting: Earnings Management and Income Smoothing?

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