The Analysis of SFAS No. 109’s Usefulness in Predicting Future Cash Flows from a Conceptual Framework Perspective

Legoria, Joseph; Sellers, Keith F.

doi:10.1016/s1052-0457(05)18007-2

Cited by 22 publications

(21 citation statements)

References 10 publications

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“…To examine whether deferred tax disclosures were useful in predicting future operating cash flows, Legoria and Sellers (2005) painstakingly examined 1994 annual reports to obtain companies' deferred tax assets, valuation allowance, and deferred tax liabilities. Consequently, their sample was limited to only 1994 for independent variables and included 1,642 companies.…”

Section: Prior Researchmentioning

confidence: 99%

The Incremental Usefulness Of Income Tax Allocations In Predicting One-Year-Ahead Future Cash Flows

Foster¹,

Ward²

2011

JABR

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<h2 style="text-align: justify; margin: 0in 34.2pt 0pt 0.5in; mso-hyphenate: none; tab-stops: center 3.25in;">Interperiod income tax allocation has been a hotly debated financial accounting issue for a long time.  Critics of interperiod tax allocation frequently question the usefulness of the extra information, particularly considering the FASB’s decision usefulness approach stated in its Conceptual Framework.  This study extends the research of Cheung et al. (1997) and Krishnan and Largay (2000) by using the ability to predict future taxes paid and future cash flow as criteria to evaluate the usefulness of interperiod tax allocation. This study extends previous research by examining not only whether interperiod tax allocation included in financial statements is useful, but also by examining whether such information is incrementally useful beyond taxes paid. For predicting future taxes paid and operating cash flow, our analyses provides little evidence that interperiod tax allocation information included in financial statements adds incremental predictive value beyond taxes paid as reported on the cash flow statement.</h2>

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Section: Prior Researchmentioning

confidence: 99%

The Incremental Usefulness Of Income Tax Allocations In Predicting One-Year-Ahead Future Cash Flows

Foster¹,

Ward²

2011

JABR

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“…109 Accounting for Income Taxes. According to Legoria and Sellers (2005), SFAS No. 109 also allows a firm greater flexibility in recognizing DTAs to a standard that is more consistent with SFAC No.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

“…109 and despite the above critics, prior literature finds that SFAS No. 109 provided incremental value-relevant information and useful information to predict future cash flows [1,26,27]. The results show that main aspects of SFAS No.…”

Section: Hypotheses Developmentmentioning

confidence: 99%

The Effect of the Adoption of International Accounting Standards No. 12 (IAS No. 12) for Firms Reporting Losses: Evidence from Korea

Hong

Shim

2019

Sustainability

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This study examines the effects of the adoption of International Accounting Standards No. 12, Income Taxes (IAS No.12) on the incremental information about future profitability for firms reporting losses compared to Korean Generally Accepted Accounting No.16, Accounting for Income Taxes (K-GAAP No.16). Specifically, this paper shows that whether the IAS No.12 affects the information of deferred tax assets (DTAs) regarding loss persistence which implies the ability to predict earnings sustainability. Using a sample of 2,905 observations from Korean listed firms that reported a loss between 2007 and 2014, we divide loss firm-years into categories of ‘good news’ (GN) or ‘bad news’ (BN) based on whether management appears to report an increase in DTAs. We find that our tax categories have incremental information about the probability of loss reversal under K-GAAP No. 16, but under IAS No.12 the incremental effects of a deferred tax balance disappear. Also, we find that investors underweight the informativeness of DTAs under K-GAAP, and after the adoption of IAS No.12, investors cannot obtain buy-and-hold returns by buying GN firm-years and selling BN firms-years. However, this is not because investors understand the information of DTAs, but because the informativeness of DTAs deteriorates after the relaxation in the recognition threshold of DTAs.

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“…Os impostos diferidos são importantes, visto fazerem parte do imposto sobre o rendimento, terem uma associação forte com o preço (Amir & Sougiannis, 1999;Amir et al, 1997) e serem uma parte material do ativo (Poterba et al, 2011). Também os ativos por impostos diferidos são materiais no ativo das empresas (Chludek, 2011a) e existe evidência de uma associação com os fluxos de caixa futuros (Legoria & Sellers, 2005;Chludek, 2011a;Chludek, 2011b) Apesar de vários estudos terem analisado as diferenças temporárias (perdas e créditos fiscais não usados) que dão origem a ativos e a passivos por impostos diferidos (Amir et al, 1997;Amir & Sougiannis, 1999;Guenther & Sansing, 2000;Laux, 2013;Chludek, 2011a), sendo as conclusões nalguns casos contraditórias, não existe nenhum estudo que tenha feito a análise em função da comparação entre as normas do IASB e do FASB e por isso surge a terceira hipótese, que relaciona o preço com os ativos por impostos diferidos separados em função do que lhe deu origem (diferenças temporárias dedutíveis e perdas e créditos fiscais não usados):…”

Section: Desenho Da Investigaçãounclassified

“…Uma outra motivação é a de que este assunto não ter sido ainda diretamente estudado, apesar de alguns estudos, como por exemplo, os de Meulen et al (2007), Soderstrom e Sun (2007), Bartov et al (2005), Atwood et al (2011), Leuz (2003), Barth, Landsman e Lang (2008) e McAnally et al (2010 terem comparado as normas. Uma outra motivação tem a ver com importância que os analistas dão aos impostos diferidos, visto estes poderem ser usados para manipular os resultados (Phillips et al, 2003), em particular por os ativos por impostos diferidos influenciarem os fluxos de caixa (Legoria & Sellers, 2005;Chludek, 2011b) e poderem ser materiais. Segundo Poterba, Rao e Seidman (2011) estes representavam em termos líquidos, cerca de 5 por cento do total do ativo de 35 por cento das empresas da amostra e que para 10 por cento das empresas estes representavam 10 por cento do total de ativo.…”

Section: Introductionunclassified

A contabilização dos ativos por impostos diferidos nos EUA e Europa e o efeito no investidor

Costa¹,

Pais²

2015

TMS

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A contabilização dos ativos por impostos diferidos é diferente, consoante se usem as normas do International Accounting Standards Board (IASB) ou as do Financial Accounting Standards Board (FASB), apesar das diversas tentativas de convergência. Assim, analisamos qual o conjunto de normas, no que respeita aos ativos por impostos diferidos é que tem maior valor relevante para o investidor, como também, quais os ativos por impostos diferidos que têm maior valor relevante, dependendo da sua origem. Tendo por base o modelo de Ohlson (1995), conclui-se que os ativos por impostos diferidos são valor relevante para o investidor. Também se conclui, que a contabilização dos ativos por impostos diferidos usando as normas do FASB, tem maior valor relevante do que usando as normas do IASB. Finalmente conclui-se que os ativos por impostos diferidos decorrentes de diferenças temporárias dedutíveis estão positivamente relacionados com o preço, o que não acontece com os que decorrem de perdas e créditos fiscais, que o estão negativamente.

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The Analysis of SFAS No. 109’s Usefulness in Predicting Future Cash Flows from a Conceptual Framework Perspective

Cited by 22 publications

References 10 publications

The Incremental Usefulness Of Income Tax Allocations In Predicting One-Year-Ahead Future Cash Flows

The Incremental Usefulness Of Income Tax Allocations In Predicting One-Year-Ahead Future Cash Flows

The Effect of the Adoption of International Accounting Standards No. 12 (IAS No. 12) for Firms Reporting Losses: Evidence from Korea

A contabilização dos ativos por impostos diferidos nos EUA e Europa e o efeito no investidor

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