Accounting for income taxes and comprehensive income: Value relevance for the Spanish financial market
Contabilidad del impuesto sobre beneficios y resultado global: relevancia valorativa en el mercado financiero español
Abstract
Accounting for income taxes has been a huge subject in academic literature. A draft on their reform is currently expected from International Accounting Standard Board (IASB). Despite the liability method for income tax accounting, empirical research has been focused on models that only consider the income in profit and loss, omitting the income tax allocation in other comprehensive income. Through a model based on Ohlson (1995), deferred income assets and liabilities impact on the valuation of firms. Accordingly, disclosure about income taxes should be increased, since these items affect investor projections on future cash flows of companies. On the other hand, the requirements on the recognition of assets arising from tax benefits should be increased, as in our study they show negative and significant coefficients.
Downloads
-
Abstract417
-
PDF (Español (España))330
References
[AECA, 2009] Asociación Española de Contabilidad y Administración de Empresas (2009). Impuesto sobre Beneficios. Documento n.° 26 de la Comisión de Principios y Normas de Contabilidad, Madrid.
[Amir et al., 1997] E. Amir, M. Kirschenheiter, K. Willard. The valuation of deferred taxes. Contemporary Accounting Research, 14 (1997), pp. 597-622
[Amir et al., 1999] E. Amir, T. Sougiannis, R. Freeman. Analysts’ interpretation and investors’ valuation of tax carryforwards. Contemporary Accounting Research, 16 (1999), pp. 1-33
[Arce y Mora, 2002] M. Arce, A. Mora. Empirical evidence of the effect of European accounting differences on the stock market valuation of earnings and book value. European Accounting Review, 11 (2002), pp. 573-599
[Arimany et al., 2011] N. Arimany, S. Moya, G. Rodríguez. Relevancia valorativa del resultado global y sus componentes frente al resultado neto. Revista de Contabilidad, 14 (2011), pp. 145-173
[Ayers, 1998] B. Ayers. Deferred tax accounting under SFAS N.° 109. An empirical investigation of its incremental value-relevance relative to APB N.° 11. The Accounting Review, 73 (1998), pp. 195-212
[Beaver y Dukes, 1972] W. Beaver, R. Dukes. Interperiod tax allocation, earnings expectations, and the behaviour of security prices. The Accounting Review, 47 (1972), pp. 320-332
[Beaver y Dukes, 1973] W. Beaver, R. Dukes. Interperiod tax allocation and delta-depreciation methods: Some empirical results. The Accounting Review, 48 (1973), pp. 549-559
[Biddle y Choi, 2006] G.C. Biddle, J. Choi. Is comprehensive income useful?. Journal of Contemporary Accounting & Economics, 2 (2006), pp. 1-32 http://dx.doi.org/10.1098/rsif.2015.0073
[Chaney y Jeter, 1994] P. Chaney, D. Jeter. The effect of deferred taxes on security prices. Journal of Accounting, Auditing and Finance, 9 (1994), pp. 91-116
[Chang et al., 2009] C. Chang, K. Herbohn, I. Tutticci. Markets perception of deferred tax accruals. Accounting and Finance, 49 (2009), pp. 645-673
[Chen y Schoderbek, 2000] K. Chen, M. Schoderbek. The 1993 tax rate increase and deferred tax adjustments: A test of functional fixation. Journal of Accounting Research, 38 (2000), pp. 23-44
[Chludek, 2011] A.K. Chludek. Perceived versus actual cash flow implications of deferred taxes — An analysis of value relevance and reversal under IFRS. Journal of International Accounting Research, 10 (2011), pp. 1-25
[Dhaliwal et al., 2000] D. Dhaliwal, R. Trezevant, M. Wilkins. Tests of deferred tax explanation of the negative association between the LIFO reserve and firm value. Contemporary Accounting Research, 17 (2000), pp. 41-59
[Easton y Zmijewski, 1989] P. Easton, M. Zmijewski. Cross-sectional variation in the stock market response to accounting earnings announcements. Journal of Accounting and Economics, 11 (1989), pp. 2-3
[Financial Accounting Standard Board, 1992] Financial Accounting Standard Board (1992). Statement of Financial Accounting Standards (SFAS) núm. 109, Accounting for Income Taxes, Stamford.
[Frischmann et al., 2008] P. Frischmann, T. Shevlin, R. Wilson. Economic consequences of increasing the conformity in accounting for uncertain tax benefits. Journal of Accounting and Economics, 46 (2008), pp. 261-278
[García Ayuso y Zamora Ramírez, 2003] M. García Ayuso, C. Zamora Ramírez. Análisis de los factores determinantes en el reconocimiento de créditos por pérdidas fiscales en las empresas españolas. Revista Española de Financiación y Contabilidad, 32 (2003), pp. 319-350
[Giner Inchausti y Pardo Pérez, 2011] B. Giner Inchausti, F. Pardo Pérez. La relevancia valorativa del resultado global frente al resultado neto: una perspectiva europea. Revista Española de Financiación y Contabilidad, 25 (2011), pp. 319-350
[Givoly y Hayn, 1992] D. Givoly, C. Hayn. The valuation of the deferred tax liability: Evidence from the stock market. The Accounting Review, 67 (1992), pp. 394-410
[Graham et al., 2012] J. Graham, J. Raedy, D. Shackelford. Research in accounting for income taxes. Journal of Accounting and Economics, 53 (2012), pp. 412-434
[Hanlon, 2005] M. Hanlon. The persistence and pricing of earnings, accruals and cash flows when firms have large book-tax differences. The Accounting Review, 80 (2005), pp. 137-166
[Hanlon y Heitzman, 2010] M. Hanlon, S. Heitzman. A review of tax research. Journal of Accounting and Economics, 50 (2010), pp. 127-178
[Hicks, 1946] Hicks. Value and Capital. 2nd ed, Clarendon Press, (1946)
[Holthausen y Watts, 2001] R. Holthausen, R. Watts. The relevance of the value-relevance literature for financial accounting standard setting. Journal of Accounting and Economics, 31 (2001), pp. 3-75
[Kanagaretnam et al., 2009] K. Kanagaretnam, R. Mathieu, M. Shehata. Usefulness of comprehensive income reporting in Canada. Journal of Accounting and Public Policy, 28 (2009), pp. 349-365
[Kormendi y Lipe, 1987] R. Kormendi, R. Lipe. Earnings innovations, earnings persistence and stock returns. Journal of Business, 60 (1987), pp. 323-345
[Lev y Nissim, 2004] B. Lev, D. Nissim. Taxable income, future earnings and equity values. The Accounting Review, 79 (2004), pp. 1039-1074
[Lynn et al., 2008] S. Lynn, C. Seethamraju, A. Seetharaman, D. Weber. Incremental value relevance of unrecognized deferred taxes: Evidence from the United Kingdom. The Journal of the American Taxation Association, 30 (2008), pp. 107-130
[Martínez Vargas et al., 2012] J. Martínez Vargas, G. Labatut Serer, E. Bustos Contell. Corporate income tax accounting in Spain: An empirical study. International Journal of Critical Accounting, 4 (2012), pp. 702-727
[O’Hanlon y Pope, 1999] J. O’Hanlon, P. Pope. The value relevance of UK dirty surplus accounting flows. British Accounting Review, 31 (1999), pp. 459-482
[Ohlson, 1995] J. Ohlson. Earnings, book values, and dividends in equity valuation. Contemporary Accounting Research, 11 (1995), pp. 661-687
[Rayburn, 1986] J. Rayburn. The association of operating cash flow and accruals with security returns. Journal of Accounting Research, 24 (1986), pp. 112-133
[Shackelford y Shevlin, 2001] D. Shackelford, T. Shevlin. Empirical tax research in accounting. Journal of Accounting and Economics, 31 (2001), pp. 321-387
[Shevlin, 1999] T. Shevlin. Research in taxation. Accounting Horizons, 13 (1999), pp. 427-441
[Schmidt, 2006] A. Schmidt. The persistence, forecasting and valuation implications of the tax change components of earnings. The Accounting Review, 81 (2006), pp. 589-616
[Schipper y Vincent, 2003] K. Schipper, L. Vincent. Earnings quality. Accounting Horizons, 17 (2003), pp. 97-110
[Skinner, 1999] J. Skinner. How well does net income measure firm performance? A discussion of two studies. Journal of Accounting and Economics, 26 (1999), pp. 105-111
[Sousa Sánchez, 2009] F. Sousa Sánchez. Fundamentos conceptuales del resultado global. Revista de Contabilidad, 12 (2009), pp. 46-61
[ICAEW, 1985] The Institute of Chartered Accountants in England and Wales (ICAEW): Statement of Standard Accounting Practique (SSAP) núm. 15, Accounting for Deferred Tax, London 1985.
[Zamora Ramírez y Sierra Molina, 2000] C. Zamora Ramírez, G.J. Sierra Molina. Una perspectiva crítica desde el marco conceptual respecto a la contabilización del impuesto sobre beneficios. Revista de Contabilidad, 3 (2000), pp. 183-209
The publications in this journal are subject to the following terms:
1. Ediciones de la Universidad de Murcia (EDITUM) and ASEPUC conserve the patrimonial rights (copyright) of the published manuscripts, and favour and allow their reuse under the licence of use indicated in point 2.
2. The manuscripts are published in the electronic edition of the journal under an Attribution-NonCommercial-NoDerivatives 4.0 International licence. It allows to copy, distribute and include the article in a collective work (for example, an anthology), as long as there is no commercial purpose, the article is not altered or modified and the original work is properly cited. This journal is free of charge for the Open Access publication. ASEPUC and EDITUM finance the productiona and publication costs of the manuscripts.
3. Conditions for self-archiving. Authors are permitted and encouraged to electronically disseminate the published version of their works, as it favors their circulation and dissemination and thus a possible increase in their citation and reach among the academic community.
