Continuing Case Against Inter-Period Tax Allocation

Colley, Ron; Rue, Joseph C.; Volkan, Ara

doi:10.19030/jber.v7i6.2302

Cited by 4 publications

(3 citation statements)

References 12 publications

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“…In the second (2001–2010) and third decades (2011–2019), further research was triggered by high-profile accounting scandals like Enron, WorldCom, or Xerox, as well as the economic crisis of 2008 and various regulatory changes. Furthermore, researchers were motivated by the ongoing debate among preparers, regulators, standard-setters, and financial statement users as to whether any benefit in deferred tax accounting could justify the relatively high accounting costs (Beechy 2007 ; Colley et al 2009 ; Bauman and Shaw 2016 ; Brouwer and Naarding 2018 ). These triggers motivated both earnings management studies and value relevance studies.…”

Section: Bibliographic Analysismentioning

confidence: 99%

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

Görlitz

Dobler

2021

Manag Rev Q

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Deferred 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.

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Section: Bibliographic Analysismentioning

confidence: 99%

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

Görlitz

Dobler

2021

Manag Rev Q

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“…The information on deferred taxes is among the most objectively specialized (Colley et al, 2009) and costly accounting entries. In many tax regimes, Book income (or loss) differs from tax income.…”

Section: Taxes and Deferred Taxationmentioning

confidence: 99%

The informative value of taxes: The case of temporal differences in tax accounting

Chytis¹

2019

J. Account. Taxation

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This work is an overview of empirical research of the last decades in the field of deferred taxes, focusing on their value relevance when making business, investment and financing decisions. The majority of research is derived from the Anglo-Saxon area, where the USA Accounting Standard SFAS No.109 is implemented. According to the relevant literature, Deferred Tax Assets, in contrast to Deferred Tax Liabilities, are valued positively by capital markets. Deferred Taxes seem to correlate with Earnings Management and contribute positively to the forecast of future cash flows. An aggressive presentation of taxes in the balance sheet and significant Book-Tax Differences (BTDs) have a negative effect on credit rating and are perceived as a red flag for low quality earnings. The question whether the findings of these surveys can be useful for countries with different tax systems and accounting standards does not seem to have been answered adequately.

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“…One of the most complex issues in the preparation of financial statements appears to be that of Deferred Taxes (Eierle & Haller, 2010;Colley et al, 2009). Deferred Tax Assets (DTA) and Liabilities (DTL) on balance sheets incorporate the estimated future tax effects of income taxes arising from temporary differences between Book and Taxable Income (Book-Tax Differences-BTDs).…”

Section: Introductionmentioning

confidence: 99%

Audit Firms, Deferred Taxation and Financial Reporting

Chytis

Filos

Tagkas

et al. 2016

International Journal of Corporate Finance and Accounting

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The purpose of this paper is the sectoral analysis and evaluation of the external audit reports in relation to the amounts of deferred taxes on the balance sheets of listed companies in the Athens Stock Exchange (ASE). External auditors participate significantly in the preparation of financial reporting, reducing agency problems and aiding acceptance of such information by the users as reliable. The “unqualified” audit reports correspond to more than two thirds of the total, while in the banking sector there is no “unqualified” (ie without even issue of ‘emphasis') Audit Report after 2011. More than two thirds of Deferred Tax Assets - including those from Loss Carryforwards - (DTA), Deferred Tax Liabilities (DTL), and Deferred Tax in the Income Statement appear on the Balance Sheets of the companies audited by the Big 5. Audit firms and supervisory authorities do not seem to have made satisfactory evaluation and exploitation of this information.

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Continuing Case Against Inter-Period Tax Allocation

Cited by 4 publications

References 12 publications

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

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

The informative value of taxes: The case of temporal differences in tax accounting

Audit Firms, Deferred Taxation and Financial Reporting

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