The Financial Crisis and the Value-relevance of Recognised Deferred Tax Assets

Badenhorst, Wessel; Ferreira, Petri H.

doi:10.1111/auar.12101

Cited by 17 publications

(27 citation statements)

References 24 publications

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“…(), who compare the value relevance of capitalised goodwill and identifiable intangible assets under the two Australian accounting regimes, the AGAAP and the AIFRS, book value has been adjusted. More recently, Badenhorst and Ferreira () analyse the impact of the financial crisis on the value relevance of deferred tax assets in Australia and the UK.…”

Section: Sample and Research Methodologymentioning

confidence: 99%

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The Value Relevance of Operating Lease Liabilities: Economic Effects of IFRS 16

Inchausti

Pardo

2018

Australian Accounting Review

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The new IASB and FASB models for leases aim to improve the quality of financial reporting. To this end, both standard setters impose the recognition of assets and liabilities for operating leases. Meanwhile, preparers have been strongly lobbying against these changes, as in their view the new treatment will lead to negative economic consequences. We undertake a value-relevance study to examine whether as-if capitalised operating leases are priced by market users in a relatively unexplored setting. We consider Spanish listed firms, and employ handcollected data on operating leases disclosed in the notes to the financial statements to constructively capitalise the assets and liabilities. Our analysis suggests that investors in code-law countries with less developed markets and low enforcement quality do not behave any differently to those in common-law countries that have more developed markets and stricter enforcement policies. Investors equally value recognised debts and operating lease liabilities resulting from information in the notes in retail sectors. In our view, these results could provide some comfort to managers in the most affected industries, as they suggest the change will not have a major impact on the stock exchange.

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Section: Sample and Research Methodologymentioning

confidence: 99%

“…; Aledo et al. ; Badenhorst and Ferreira ; Reverte ; Khan et al. ), we use a share price specification model in order to mitigate the potential for incorrect inferences based on size differences (the ‘scale effect’).…”

Section: Sample and Research Methodologymentioning

confidence: 99%

The Value Relevance of Operating Lease Liabilities: Economic Effects of IFRS 16

Inchausti

Pardo

2018

Australian Accounting Review

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“…Regression outcomes can also be driven by certain events that are common to all firms such as market trends (Alali and Foote ) and economic turbulence (Kane et al. ; Badenhorst and Ferreira ). For instance, Özkan and Kaytmaz Balsari () conclude that RCs of BVE (net income) reported for crisis periods are considerably different than RCs of BVE (net income) reported for non‐crisis periods .…”

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confidence: 99%

How Does Unobserved Heterogeneity Affect Value Relevance?

Ertuğrul

Demir

2018

Australian Accounting Review

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Most value relevance (VR) studies consider an accounting item value relevant if the regression coefficient (RC) of that item is statistically significant. Unobservable heterogeneity leads to biased RCs, interpretation of which generates incorrect inferences. To obtain unbiased RCs, the effect of unobservable heterogeneity on RCs should be mitigated. As two dimensions of unobservable heterogeneity are at the firm level and time level, outcomes with the following unobservable heterogeneity concerns are discussed: i) no fixed-effects (FE); ii) firm FE; iii) time FE; and iv) two-way (firm and time) FE. By employing a sample of Turkish firms from 2005-2014, we report several findings. First, we find that regressions with firm (time) FE yield large (low) RCs vis-à-vis regressions with no FE, and regressions with two-way FE generate balanced RCs compared to the others. Second, we compare RCs with i and iv, and conclude that the book value of equity becomes more value relevant while net income does not after controlling for unobservable heterogeneity. Last, we arbitrarily divide the entire period into two to reveal how unobserved endogeneity affects the comparison of RCs belonging to different periods. Our outcomes robustly reveal that unobserved endogeneity leads to erroneous RC comparisons.

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“…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 (Badenhorst & Ferreira, 2016).…”

Section: Literature Reviewmentioning

confidence: 99%

Income Tax, Deferred Tax and Their Impact on the Financial Statements in Slovenia, Croatia, and Serbia

Gabršek¹

2017

CUBR

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Companies, which operate in different countries and generate same revenues and expenses due to different tax laws in each country, create larger or smaller results. Tax statements in most cases differ from the financial statements.The purpose of research was to determine what are the differences in corporate profits, and the amount of tax firms in different countries. It was made for the simulation calculations of business balance sheets and tax balance sheets for the three countries. The starting point is to identify the amounts of revenues, costs, and expenses and then add the impact of local laws and accounting standards which have an impact on different heights of the income tax and deferred taxes. The study includes three countries, which differ in their laws on corporation tax and have in their local accounting standards: International Financial Reporting Standards and International Accounting Standards.The research showed the least tax paying companies in Serbia and the more tax paying companies in Croatia. The maximum period for the tax payment is in Serbia, while Slovenia has the best conditions for the benefit tax losses from previous years.

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The Financial Crisis and the Value-relevance of Recognised Deferred Tax Assets

Cited by 17 publications

References 24 publications

The Value Relevance of Operating Lease Liabilities: Economic Effects of IFRS 16

The Value Relevance of Operating Lease Liabilities: Economic Effects of IFRS 16

How Does Unobserved Heterogeneity Affect Value Relevance?

Income Tax, Deferred Tax and Their Impact on the Financial Statements in Slovenia, Croatia, and Serbia

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