The Effect of Analysts' Disaggregated Forecasts on Investors and Managers: Evidence Using Pre-Tax Forecasts

2018 ◽  
Vol 94 (3) ◽  
pp. 279-302 ◽  
Author(s):  
Landon M. Mauler
Keyword(s):  
Firm Performance ◽  
Earnings Management ◽  
Income Tax ◽  
Firm Behavior ◽  
Earnings Forecasts ◽  
The Impact ◽  
Tax Expense

ABSTRACT I examine whether analysts' tax forecasts are informative to investors and whether analysts' tax forecasts impact firm behavior. Using I/B/E/S data from 2002–2014, I find that investors utilize both analysts' pre- and after-tax earnings forecasts in evaluating firm performance, indicating analysts' tax forecasts are value-relevant. Furthermore, evidence that investors discount earnings management through the income tax expense is limited to firms with tax forecast coverage. In examining the impact of analysts' tax forecasts on firm behavior, I find analysts' tax forecast coverage is positively associated with quantitative and qualitative tax footnote disclosure. The results suggest that analysts' tax forecasts are value-relevant and that analysts' tax coverage impacts firm decisions related to the income tax expense account. This evidence informs academics and practitioners as to the role of analysts' tax forecasts.

scholarly journals THE IMPACT OF DEFERRED TAX EXPENSE AND TAX PLANNING TOWARD EARNINGS MANAGEMENT AND PROFITABILITY

2019 ◽  
Vol 21 (2) ◽  
pp. 215-236
Author(s):  
ROCKY ALFIAN BUNACA ◽  
NURDAYADI
Keyword(s):  
Earnings Management ◽  
Significant Influence ◽  
Stock Exchange ◽  
Tax Planning ◽  
Independent Variables ◽  
Deferred Tax ◽  
The Impact ◽  
Intervening Variables ◽  
Tax Expense

The aim of this research is to analyze the impact of Deferred Tax Expense and Tax Planning toward Earnings Management and Company’s Profitability. The sample of this research are taken from 24 companies from Consumer Goods Sector that listed in Indonesia Stock Exchange from 2013 – 2017. The variables of this research are Deferred Tax Expense and Tax Planning as Independent Variables, Earnings Management as Intervening Variable, and Company’s Profitability as Dependent Variable. This research use Path Regression Analysis to analyze the role of Intervening Variables in influence other variables. The result of this research, it is found that Deferred Tax Expense has a significant influence toward Earnings Management, but has no influence toward Company’s Profitability. Tax Planning has no significant influence to Earnings Management, but has a significant influence toward Company’s Profitability. It also found that Earnings Management as intervening variable strengthen the influence from Deferred Tax Expense toward Company’s Profitability, but weaken the influence from Tax Planning toward company’s profitability.

Market orientation, innovation commercialization capability and firm performance relationships: the moderating role of supply chain influence

2017 ◽  
Vol 32 (7) ◽  
pp. 913-924 ◽  
Author(s):  
Jeen-Su Lim ◽  
William K. Darley ◽  
David Marion
Keyword(s):  
Supply Chain ◽  
Firm Performance ◽  
Market Orientation ◽  
Innovation Management ◽  
Strategy Formulation ◽  
Content Type ◽  
Positive Effects ◽  
The Impact ◽  
Moderating Role

Purpose The study aims to explore supply chain influence (SCI) on the linkages among market orientation, innovation capabilities and firm performance (FP), using the resource-based view as a theoretical backdrop. Design Survey data from 182 top managers who are involved in strategy formulation and innovative direction of their companies was collected and analyzed using moderated multiple regression analysis. Findings Results revealed a moderating role of the SCI in that the proactive market orientation (PMO) and FP relationship is stronger when SCI is high, and innovation commercialization capability (ICC) and FP relationship is stronger when SCI is low. Practical implications Firms pursuing high PMO strategy must collaborate with supply chain function to achieve the full effect of PMO. Additionally, as supply chain is critical to meeting customers’ needs, these firms should allow supply chain to exert greater influence to enjoy the positive effects of PMO in addition to ensuring full integration into marketing strategy implementation. Also, firms with high ICC need to limit SCI to maximize the benefit of ICC on FP, just as innovation management needs to be cognizant of other functional areas. Originality/value The study investigates the potential moderating role of SCI on the relationships among market orientation, ICC and FP. The study fills a gap in the understanding of the nature and role of supply chain in the marketing–supply chain interaction, and the impact on FP.

Accounting Discretion, Horizon Problem, and CEO Retirement Benefits

2009 ◽  
Vol 84 (5) ◽  
pp. 1553-1573 ◽  
Author(s):  
Paul Kalyta
Keyword(s):  
Firm Performance ◽  
Earnings Management ◽  
Discretionary Accruals ◽  
Pension Plans ◽  
Primary Data ◽  
Retirement Benefits ◽  
Horizon Problem ◽  
Accounting Choices ◽  
Fortune 1000 ◽  
The Impact

ABSTRACT: Empirical research on the impact of managerial retirement on discretionary accounting choices is inconclusive, with most studies finding no evidence of earnings management in the pre-retirement period. I argue that income-increasing accounting choices in final pre-retirement years are particularly appealing to managers whose pension depends on firm performance in these years. Using primary data on retired CEOs of Fortune 1000 firms, I investigate the impact of CEO pension plans on discretionary accruals. Consistent with the prediction, I find evidence of income-increasing earnings management in the pre-retirement period only when CEO pension is based on firm performance. I also report evidence of negative abnormal market reaction to CEO retirement in firms with performance-contingent CEO pensions.

scholarly journals Influence of Capital Structure on Corporate Performance of Listed Firm in PSX: Role of External Factors

2021 ◽  
Vol 7 (3) ◽  
Author(s):  
Abdul Hameed ◽  
Farheen Zahra Hussain ◽  
Khawar Naheed ◽  
Muhammad Sadiq Shahid
Keyword(s):  
Firm Performance ◽  
Capital Structure ◽  
Debt Financing ◽  
External Factors ◽  
Least Square ◽  
Total Debt ◽  
Integral Role ◽  
Equity Ratio ◽  
The Impact

Purpose: A company’s capital structure is a blend of its equity and debt financing and is considered a significant factor in the valuation of any firm. The decisions related to capital structure formation play an integral role for the firms, therefore; this research tends to explore the factors of capital structure and their impact on firm performance. For this purpose, financial data for different listed companies in PSX has been gathered, and dividends and taxes are used as firm external factors.  Design/Methodology/Approach: To examine the impact, the panel data has been used for the period 2016-2020 and panel least square has been applied. Findings: The findings suggest that among the variables current ratio, dividends, taxation, total debt to total equity ratio, and the firm size are statistically significant to profitability. The study also concludes that dividends and tax have a greater impact on capital structure and firm performance.   Implications/Originality/Value: Managers and owners of the firms must make sure that their profits are used for future investments rather than payment of debts to avoid bankruptcy.  

scholarly journals Access to Finance, Financial Development and Firm Performance – Evidence from Pakistan

2020 ◽  
pp. 49-68
Author(s):  
Waqas Ahmad ◽  
Zaheer Abbas ◽  
Zulfiqar Ali Shah
Keyword(s):  
Firm Performance ◽  
Financial Development ◽  
Financial Constraints ◽  
Small And Medium Enterprises ◽  
Labour Productivity ◽  
Fixed Effect Model ◽  
Access To Finance ◽  
Medium Enterprises ◽  
The Impact

Purpose- The aim of the study is to investigate the impact of financial constraints on firm performance. The role of financial development in reducing financial constraints is also investigated. Design/methodology/approach- Data from two waves of World Bank Enterprise Surveys from 2007 to 2013 was used to construct the required variables. A balanced sample of 427 firms was selected and a fixed-effect model was used for empirical estimations. Findings- The findings indicate the significance of access to finance in terms of explaining firm performance. Improvement in access to finance led to subsequent improvement in firm performance as measured by labour productivity. The role of financial development in reducing credit constraints is not as expected. The concentration of lending to the private sector in the hands of large corporations at the expense of small and medium enterprises could be the reason for such a result. Originality/value – Most of the work in this area is focused on large listed firms. The present study focused primarily on small and medium-sized enterprises in Pakistan. Multiple measures of financial constraints and firm performance were used for robustness. The investigation also covers the role of financial development and its microeconomic implications at the level of an enterprise.

scholarly journals CEO Compensation and Firm Performance: The Role of ESG Transparency

2020 ◽  
Vol 4 (2) ◽  
pp. 278
Author(s):  
Chetna Rath ◽  
Florentina Kurniasari ◽  
Malabika Deo
Keyword(s):  
Firm Performance ◽  
Chief Executive Officers ◽  
Ceo Compensation ◽  
Negative Relationship ◽  
Chief Executive ◽  
Long Run ◽  
Ceo Pay ◽  
Executive Officers ◽  
The Impact

Chief executive officers (CEOs) of environmental, social, and governance (ESG) firms are known to take lesser pay and engage themselves in corporate social responsibility activities to achieve the dual objective of the enhancement of firm’s performance as well as benefit for stakeholders in the long run. This study examines the role of ESG transparency in strengthening the impact of firm performance on total CEO pay in ESG firms. A panel of 67 firms for the period of 2014–2019 has been analyzed using the two-step system GMM model, with NSE Nifty 100 ESG Index as the data sample and ESG scores from Bloomberg database as a proxy for transparency. Findings reveal that environmental and governance disclosure scores have the potential to intensify the negative relationship between firm performance and CEO compensation, while social disclosure scores do not. In addition, various firm-specific, board-specific, and CEO-specific attributes have also been considered controls affecting remuneration. This paper contributes to the literature by exploring the effect of exhibiting ESG transparency and its nexus with CEO pay as well as firm performance.

The role of audit committees in mitigating earnings management: evidence from Jordan

2022 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Taha Almarayeh ◽  
Modar Abdullatif ◽  
Beatriz Aibar-Guzmán
Keyword(s):  
Developing Countries ◽  
Earnings Management ◽  
Audit Committee ◽  
Discretionary Accruals ◽  
Least Square ◽  
Audit Committees ◽  
Institutional Setting ◽  
Content Type ◽  
The Impact

PurposeThis study examines the relationship between audit committees (ACs) and earnings management (EM) in the developing country context of Jordan. In particular, it investigates whether audit committee attributes, including their size, independence, expertise and meetings, are able to restrict discretionary accruals as a proxy for EM.Design/methodology/approachThe generalized least square (GLS) regression was used to study the association between audit committee attributes and discretionary accruals, as a proxy of EM, for a sample of industrial firms listed on the Amman Stock Exchange (ASE) during the period 2012–2020. Data were obtained from the firms' annual reports.FindingsThe regression results indicate that audit committee independence is the only audit committee attribute that seems to improve the effectiveness of ACs, in that it is significantly associated with less EM, while other audit committee attributes that were tested do not show statistically significant associations.Research limitations/implicationsIn emerging markets, like Jordan, ACs may not be an efficient monitoring mechanism; therefore, it can be argued that the prediction made by the agency theory about the role of ACs in mitigating opportunistic EM activities does not necessarily apply to all contexts.Practical implicationsA better understanding of audit committee effectiveness in developing countries could help regulators in these countries assess the impact of planned corporate governance (CG) reforms and to better monitor and enhance the performance of ACs.Social implicationsIn a setting characterized by closely held companies, high power distance and low demand for high-quality CG mechanisms, this study contributes to understanding how this business system operates, and how improving CG mechanisms could be successful in such cultures.Originality/valueThis study investigates the under-researched relationship between audit committee characteristics and EM in developing countries. In so doing, it aims to provide new insights into this relationship within the developing context case of Jordan, including if and how the institutional setting influences this relationship.

Decomposing Changes in Deferred Tax Assets and Liabilities to Isolate Earnings Management Activities

2004 ◽  
Vol 26 (s-1) ◽  
pp. 43-66 ◽  
Author(s):  
John D. Phillips ◽  
Morton Pincus ◽  
Sonja Olhoft Rego ◽  
Huishan Wan
Keyword(s):  
Earnings Management ◽  
Income Tax ◽  
Deferred Tax Assets ◽  
Using Data ◽  
Deferred Tax ◽  
Annual Earnings ◽  
Tax Expense ◽  
Footnote Disclosures

This paper provides evidence on the types of accounts that reveal earnings management activities. We build on Burgstahler and Dichev's (1997) evidence of earnings management to avoid an earnings decline and Phillips et al.'s (2003) findings that deferred tax expense (DTE) can be used to detect such earnings management. In particular, we investigate the relation between changes in annual earnings and changes in deferred tax asset and liability components using data hand-collected from firms' income tax footnote disclosures. Our evidence indicates that changes in the net deferred tax liability (DTL) component related to revenue and expense accruals and reserves can be used to detect earnings management to avoid an earnings decline. In addition, we build on Joos et al.'s (2003) results and partition our sample into firm-years with positive and negative changes in net DTLs and repeat our analyses. In contrast to the Joos et al. (2003) finding that DTE can be used to detect earnings management only for firm-years in which DTE is negative, we find that both subsamples reflect earnings management of revenue and expense accruals and reserves to report earnings increases.

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