Earnings Management through Effective Tax Rates: The Effects of Tax‐Planning Investment and the Sarbanes‐Oxley Act of 2002*

Cook, Kirsten A.; Huston, George Ryan; Omer, Thomas C.

doi:10.1506/car.25.2.6

Cited by 141 publications

(63 citation statements)

References 28 publications

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“…2 Academic research finds limited evidence that general nonaudit services impair auditor independence and, by implication, financial reporting 3 . Specific to tax services, Cook, Huston, and Omer (2008) observe no differential management of tax expense to achieve analysts’ forecasts when corporations use ATS, although higher amounts of ATS are associated with greater reductions in effective tax rates. Collectively, prior research finds little evidence that nonaudit services generally, or tax services specifically, are associated with impaired independence.…”

Section: Introductionmentioning

confidence: 92%

See 1 more Smart Citation

Do Auditor‐Provided Tax Services Improve the Estimate of Tax Reserves?*

Gleason

Mills

2011

Contemporary Accting Res

163

121

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Education fund for financial support. The Internal Revenue Service (IRS) provided confidential tax information to one of the authors pursuant to provisions of the Internal Revenue Code that allow disclosure of information to a contractor to the extent necessary to perform a research contract for the IRS. None of the confidential tax information received from the IRS is disclosed in this treatise. Statistical aggregates were used so that a specific taxpayer cannot be identified from information supplied by the IRS. 1.When we refer to independence throughout this paper, we mean independence in fact. We acknowledge that ATS also create a problem of independence in appearance. Several studies including Dopuch, King, and Schwartz 2003 and Khurana and Raman 2006 find investors perceive the disclosure of nonaudit services negatively. Dopuch et al. call for more evidence about the degree of correspondence between independence in fact and in appearance. 2.Joe and Vandervelde (2007) find a loss of independence could stem from auditors' subconscious actions even with no intent to conceal information.

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Section: Introductionmentioning

confidence: 92%

“…9 9 Various authors find evidence consistent with corporations using tax expense to manage earnings generally (Dhaliwal, Gleason, and Mills 2004; Cook et al 2008) or through permanently reinvested foreign earnings (Krull 2004), valuation allowances (Frank and Rego 2006; Schrand and Wong 2003), or tax reserves (Blouin and Tuna 2007). …”

mentioning

confidence: 98%

Do Auditor‐Provided Tax Services Improve the Estimate of Tax Reserves?*

Gleason

Mills

2011

Contemporary Accting Res

163

121

View full text Add to dashboard Cite

show abstract

“…8 8 Kinney et al (2004), Raghunandan et al (2003), and Robinson (2008) report improvements in auditor independence when the auditor performs tax services. Cook, Huston, and Omer (2008) reach the opposite conclusion using reported effective tax rates. None of these studies distinguish recurring and nonrecurring tax services.…”

mentioning

confidence: 89%

The Effects of Recurring and Nonrecurring Tax, Audit‐Related, and Other Nonaudit Services on Auditor Independence*

Paterson¹,

Valencia²

2011

Contemporary Accting Res

115

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“…However, in the past years, stakeholders have seen the collapse of large firms such as Enron, WorldCom and Arthur Andersen (Griffin, Lont, & Sun, 2009). The enactment of the SarbanesOxley Act of 2002 in the United States (US) was part of the move towards greater transparency under section 302 (Cook, Huston, & Omer, 2008). Some accounting practitioners are of the views that the move towards greater transparency is an overarching measure of corporate accountability and business sustainability (Khan et al, 2015;Schaltegger & Burritt, 2010).…”

Section: Introductionmentioning

confidence: 99%

The Influence of IFRS Adoption on Corporate Transparency and Accountability: Evidence from New Zealand

Edeigba¹,

Amenkhienan²

2017

AABFJ

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This study investigates the implications of the gap between International Financial Reporting Standards (IFRS) and New Zealand International Financial Reporting Standards (NZIFRS) on financial reporting transparency, accountability and corporate fraud. Content analysis of IFRS and NZIFRS was carried out to determine if there are differences between IFRS and NZIFRS. Four IFRS, namely IAS 12, IFRS 13, IFRS 15, IAS 17 and IFRS 16 were analysed on the basis of adoption concessions and Reduced Disclosure Regime (RDR) for tier 1 and 2 entities. The findings from these standards led to a review of the associated IFRS to further understand the implications of the standards on financial reporting transparency and decline in incidences of corporate fraud. We found that the difference between IFRS and NZIFRS lies in the financial reporting framework for tier 2 entities. However, we did not find a difference between IFRS and NZIFRS for entities in tier 1 but we identified a decline in incidences of corporate fraud after IFRS was adopted. We further identified the presence of information asymmetry for tier 2 which is capable of retaining Generally Accepted Accounting Principles (GAAPs). These differences may increase the incidence of corporate fraud among the entities in tier 2 of External Reporting Framework. This is due to an excessive concession from IFRS implementation in New Zealand. were analysed on the basis of adoption concessions and Reduced Disclosure Regime (RDR) for tier 1 and 2 entities. The findings from these standards led to a review of the associated IFRS to further understand the implications of the standards on financial reporting transparency and decline in incidences of corporate fraud. We found that the difference between IFRS and NZIFRS lies in the financial reporting framework for tier 2 entities. However, we did not find a difference between IFRS and NZIFRS for entities in tier 1 but we identified a decline in incidences of corporate fraud after IFRS was adopted. We further identified the presence of information asymmetry for tier 2 which is capable of retaining Generally Accepted Accounting Principles (GAAPs). These differences may increase the incidence of corporate fraud among the entities in tier 2 of External Reporting Framework. This is due to an excessive concession from IFRS implementation in New Zealand.JEL Classification: G34, G38, M48

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Earnings Management through Effective Tax Rates: The Effects of Tax‐Planning Investment and the Sarbanes‐Oxley Act of 2002*

Cited by 141 publications

References 28 publications

Do Auditor‐Provided Tax Services Improve the Estimate of Tax Reserves?*

Do Auditor‐Provided Tax Services Improve the Estimate of Tax Reserves?*

The Effects of Recurring and Nonrecurring Tax, Audit‐Related, and Other Nonaudit Services on Auditor Independence*

The Influence of IFRS Adoption on Corporate Transparency and Accountability: Evidence from New Zealand

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