scholarly journals Value Relevance of Deferred Tax Assets Since The Adoption of K－IFRS

2018 ◽  
Vol null (58) ◽  
pp. 125-144
Author(s):  
KIM, SEONGHYEON ◽  
JOINSEON ◽  
김문태
Keyword(s):  
Value Relevance ◽  
Deferred Tax Assets ◽  
Deferred Tax

scholarly journals Earnings Management Through Deferred Taxes Recognized Under IAS 12: Evidence From Pakistan

2014 ◽  
Vol 3 (1) ◽  
pp. 1-19
Author(s):  
Abdul Rafay Abdul Rafay ◽  
Mobeen Ajmal
Keyword(s):  
Earnings Management ◽  
Financial Reporting ◽  
Value Relevance ◽  
Relevant Information ◽  
Cash Flows ◽  
Deferred Taxes ◽  
Deferred Tax Assets ◽  
Operational Activities ◽  
Deferred Tax ◽  
Relevant Component

This study examines earnings management through deferred taxes calculated under the IAS 12 and its impact on firm valuation. The literature finds that book–tax nonconformity leads to better earning quality and a greater association between earnings and future expected cash flows. Given that Pakistan is a pioneering implementer of the International Financial Reporting Standards, our hypothesis is that the components of deferred tax disclosed under the IAS 12 provide value-relevant information to equity investors. We divide deferred tax components into three categories: those arising from (i) operational activities, (ii) investing activities, and (iii) financing activities. These are subdivided to ensure that no value-relevant component is aggregated with a nonvalue-relevant component, which might otherwise lead to an information slack. Our sample includes data on shariah-compliant companies listed on the Karachi Meezan Index (KMI-30). We find that deferred tax line items in firms’ balance sheets are reflected in market prices. Investors also tend to treat deferred tax line items (arising from operating, financing, and investing activities) differently. Furthermore, the value relevance is dissimilar for different components of deferred tax. Investors are wary of deferred tax assets and liabilities when pricing and are likely to penalize firms with a higher deferred tax position.

Incremental Value Relevance of Unrecognized Deferred Taxes: Evidence from the United Kingdom

2008 ◽  
Vol 30 (2) ◽  
pp. 107-130 ◽  
Author(s):  
Stephen Gregory Lynn ◽  
Chandra Seethamraju ◽  
Ananth Seetharaman
Keyword(s):  
Value Relevance ◽  
Weighted Least Squares ◽  
Annual Reports ◽  
Deferred Taxes ◽  
Deferred Tax Assets ◽  
Share Prices ◽  
The United Kingdom ◽  
Incremental Value ◽  
Theoretical Predictions ◽  
Deferred Tax

ABSTRACT: We examine empirically whether the use of the partial method for deferred taxes provides incremental information of use to investors. Specifically, we test whether U.K. capital markets valued unrecognized deferred tax amounts reported in the footnotes to U.K. annual reports, pursuant to U.K. Statement of Standard Accounting Practice (SSAP) No. 15 (ASB 1985). Our empirical model is based on Feltham and Ohlson (1995). We run iterative weighted least-squares (IWLS) regression of year-end share prices on a decomposition of book value per share for a pooled sample of U.K. firm-years drawn from the years 1993 through 1998, and find positive associations with price for net deferred tax assets—both recognized and unrecognized. Moreover, we are unable to reject the null hypothesis that both parts of deferred taxes have similar multiples in our price regressions. These findings support some theoretical predictions in Sansing (1998), Guenther and Sansing (2000, 2004), and Amir et al. (2001).

scholarly journals Value relevance of deferred tax assets in the Brazilian banking industry

2020 ◽  
Vol 31 (82) ◽  
pp. 33-49
Author(s):  
Leandro Dias Guia ◽  
José Alves Dantas
Keyword(s):  
Capital Market ◽  
Banking Industry ◽  
Value Relevance ◽  
Negative Relationship ◽  
Market Value ◽  
Economic Benefits ◽  
Equity Structure ◽  
Deferred Tax Assets ◽  
Deferred Tax

ABSTRACT This study aimed to investigate the informational relevance to the capital market of the significant level of deferred tax assets (DTAs) in the Brazilian banking industry, identifying whether such assets influence the market value of publicly-held banks. The value relevance of DTAs in the banking industry is an incipient topic in the national literature, with conflicting results in the international research. Brazil presents characteristics, most notably regarding the dimension of the asymmetries between accounting and taxable profit, which justify concern about the effects of DTAs on the market value of banks. The literature highlights issues involving DTAs related to their ability to generate economic benefits and control of the entity, especially in the banking industry, due to not fulfilling the role of financial intermediation, which would make them devoid of economic substance. This would signal potential bank risks and weaknesses, such as a reduction in the quality of equity and profits, in addition to distortions in the economic-financial indicators, which would justify a negative perception on the part of investors. As the study’s main contribution to the literature, we can highlight the identification that in the Brazilian market, the asymmetries between banks’ taxable and corporate earnings, the origin of deferred tax assets, weigh negatively on the market value of these institutions. We empirically tested the hypothesis in the Brazilian capital market, using data from 2000 to 2017 on publicly-held banks, by estimating two models - Market-to-Book and Ohlson (1995). The results of this study show that in the Brazilian capital market there is a negative relationship between the volume of the banks’ DTAs and the market value of these entities, corroborating the hypothesis that investors identify the relevance of these assets in the equity structure as a sign of the quality of the equity and the profit of these entities being undermined.

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

2016 ◽  
Vol 26 (3) ◽  
pp. 291-300 ◽  
Author(s):  
Wessel M. Badenhorst ◽  
Petri H. Ferreira
Keyword(s):  
Financial Crisis ◽  
Value Relevance ◽  
Deferred Tax Assets ◽  
Deferred Tax

The Influence of Tax and Nontax Factors on Banks' Choice of Organizational Form

2003 ◽  
Vol 78 (1) ◽  
pp. 297-325 ◽  
Author(s):  
Leslie Hodder ◽  
Mary Lea McAnally ◽  
Connie D. Weaver
Keyword(s):  
Equity Capital ◽  
Income Taxes ◽  
Regulatory Capital ◽  
Strategic Choices ◽  
Deferred Taxes ◽  
Deferred Tax Assets ◽  
State Income ◽  
Deferred Tax ◽  
Tax Loss ◽  
First Time

This paper identifies tax and nontax factors that influence commercial banks' conversion from taxable C-corporation to nontaxable S-corporation from 1997 to 1999, after a 1996 tax-law change allowed banks to convert to S-corporations for the first time. We find that banks are more likely to convert when conversion saves dividend taxes, avoids alternative minimum taxes, and minimizes state income taxes. Banks are less likely to convert when conversion restricts access to equity capital, nullifies corporate tax loss carryforwards, and creates potential penalty taxes on unrealized gains existing at the conversion date. Banks with significant deferred tax assets are less likely to convert, presumably because the write-off of deferred taxes at conversion decreases regulatory capital and exposes the bank to costly regulatory intervention. We also investigate the strategic choices banks make before converting to S-corporations. Converting banks alter their capital structures, deliberately sell appreciated assets, and strategically set dividends to augment net conversion benefits.

scholarly journals Pengaruh Deferred Tax, Capital Intensity dan Return On Asset terhadap Agresivitas Pajak

2021 ◽  
pp. 160-172
Author(s):  
Angeline Margaretha ◽  
Mila Susanti ◽  
Valentine Siagian
Keyword(s):  
Coal Mining ◽  
Stock Exchange ◽  
Linear Regression Analysis ◽  
Secondary Data ◽  
Capital Intensity ◽  
Multiple Linear Regression Analysis ◽  
Significance Test ◽  
Tax Aggressiveness ◽  
Deferred Tax Assets ◽  
Deferred Tax

This research was conducted to identify the effect of Deferred Tax, Capital Intensity, and Return On Assets on Tax Aggressiveness in the coal mining sub-sector industry. This research uses a quantitative descriptive method. This paper uses secondary data from information that was obtained from the coal mining sub-sector listed on the Indonesia Stock Exchange in 2016-2019. The data collection method used purposive sampling. In this paper, there are several analysis used to process the data, which are, descriptive statistic analysis, correlation coefficient analysis, determination coefficient analysis, multiple linear regression analysis, significance test, and classical assumption test assisted by using Statistical Product and Service Solutions (SPSS) 23. The results of this research prove simultaneously. Deferred Tax Asset, Capital Intensity, and Return On Asset have a significant effect on tax aggressiveness, with the resulting significance value (0.006 <0.05). However, partially deferred tax assets do not have a significant effect on tax aggressiveness (0.365> 0.05), on the other hand, Capital Intensity is significant (0.001 <0.05), and Return On Asset has a negative significance(0.002 <0.05) effect to tax aggressiveness.  Keywords : Deferred Tax Expense, Capital Intensity, Return On Asset, and Tax  Aggressiveness

scholarly journals Does Transfer Pricing Moderate the Effect of Deferred Tax Assets and Deferred Tax Expenses on Accrual Earnings Management of Firms in Indonesia?

2021 ◽  
Vol 6 (3) ◽  
pp. 97-103
Author(s):  
Nera Marinda Machdar ◽  
Dade Nurdiniah
Keyword(s):  
Earnings Management ◽  
Transfer Pricing ◽  
Manufacturing Companies ◽  
Moderator Variable ◽  
Policy Makers ◽  
Deferred Tax Assets ◽  
Management Actions ◽  
Deferred Tax ◽  
Accounting Policy

The purpose of this study is to analyze (a) the effect of deferred tax assets on accrual earnings management; (b) the effect of deferred tax expenses on accrual earnings management; (c) the role of transfer pricing as a moderator variable to strengthen the effect of deferred tax assets on accrual earnings management; and (d) the role of transfer pricing as a moderator variable to strengthen the effect of deferred tax expenses on accrual earnings management. The samples consist of 160 manufacturing companies listed in Indonesia Stock Exchange (IDX). The study utilizes the financial statements from 2012 to 2018. This study presents that (a) deferred tax assets influence accrual earnings management; b) deferred tax expenses affect accrual earnings management; c) transfer pricing does not strengthen the effect of deferred tax assets on accrual earnings management; and d) transfer pricing does not strengthen the effect of deferred tax expenses on accrual earnings management. This study contributes to accounting studies, tax authorities and regulators, and accounting policy makers. Firstly, this research contributes to the development of accounting studies on the role of transfer pricing as a moderator of the effect of deferred tax assets and deferred tax liabilities on earnings management. Secondly, the results of this study can make a consideration for tax authorities and regulators in addressing company management actions to minimize the amount of tax paid by utilizing policies according to PSAK. It is worth considering how to sanction companies that deliberately reduce the amount of tax that should be paid. It is necessary to conduct tax investigation by the Directorate General of taxes on companies that are indicated to have practiced accrual earnings management with the aim of reducing the tax burden. Thirdly, accounting policy makers need to consider how management reduces the tax that should be paid through accounting policies that are allowed under PSAK and transfer pricing mechanism.

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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