Changes in unrecognised deferred tax accruals from carry-forward losses: Opportunism or signalling?

Herbohn, K., Tutticci, I. and Khor, P. S. (2008). Changes in unrecognised deferred tax accruals from carry-forward losses: Opportunism or signalling?. In: 2008 AFAANZ/IAAR Conference. 2008 AFAANZ/IAAR Conference, Sydney, Australia, (1-38). 6-8 July 2008.

Author Herbohn, K.
Tutticci, I.
Khor, P. S.
Title of paper Changes in unrecognised deferred tax accruals from carry-forward losses: Opportunism or signalling?
Conference name 2008 AFAANZ/IAAR Conference
Conference location Sydney, Australia
Conference dates 6-8 July 2008
Proceedings title 2008 AFAANZ/IAAR Conference
Place of Publication Sydney, Australia
Publisher The Accounting and Finance Association of Australia and New Zealand
Publication Year 2008
Year available 2008
Sub-type Fully published paper
Issue Paper 526
Start page 1
End page 38
Total pages 38
Collection year 2009
Language eng
Abstract/Summary This study examines whether changes in the amount of unrecognised deferred tax assets from carry forward losses, determined in accordance with AASB1020 ‘Accounting for Income Taxes’, reflect managers’ incentives to opportunistically manage financial statements, or communicate private information about future profitability. Using data from firms in the extractives and biotechnology industries during the period 1999 to 2005, we find evidence consistent with income-increasing earnings management when pre-tax earnings are below the mean analyst forecast. Interestingly, we find that the potential existence of earnings management does not reduce to the capacity of unrecognised deferred tax assets from carry-forward losses to predict one-year-ahead performance. This result highlights the complexity of managers’ incentives in trading-off between managing earnings toward desired targets and communicating useful information to market participants.
Subjects E1
150101 Accounting Theory and Standards
900199 Financial Services not elsewhere classified
Keyword Deferred tax asset
Earnings management
Balance sheet management
Signalling
Carry forward losses
Income statement method
Extractive industry
Biotechnology industry
Q-Index Code E1
Q-Index Status Confirmed Code
Additional Notes Paper 526. Pdf of paper on conference website.

 
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Created: Thu, 16 Apr 2009, 13:46:31 EST by Karen Morgan on behalf of UQ Business School