Evidence on Book-Tax Differences and Disclosure Quality Based on the Notes to the Financial Statements

Evers, Maria Theresia; Finke, Katharina; Matenaer, Sebastian; Meier, Ina; Zinn, Benedikt

doi:10.2139/ssrn.2475909

Cited by 9 publications

(12 citation statements)

References 5 publications

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“…In terms of firm-specific characteristic variables, the results show positive and significant associations only between TD and two variables: firm size (FSIZ) and industry dummy (INDS). The positive and momentous association between FSIZ and TD is consistent with a study by Evers et al (2014). The results are generally consistent with the empirical disclosure literature.…”

Section: Resultssupporting

confidence: 90%

Corporate governance and tax disclosure phenomenon in the Malaysian listed companies

Mgammal

Bardai

Ismail

2018

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Purpose This paper aims to examine the impact of corporate governance internal mechanisms on tax disclosure in non-financial firms in Malaysia. Managerial ownership and incentive compensation are used as proxies to reflect corporate governance conduct. Design/methodology/approach This study uses panel data set to analyse 286 non-financial listed companies on Bursa Malaysia for the years 2010-2012. Tax disclosure was gathered from the financial statements, particularly in the consolidated of tax expenses. Tax disclosure was measured using modified effective tax rate reconciling items. Multivariate statistical analyses were run on the sample data. Findings This study finds that managerial ownership and incentive compensation do not significantly influence tax disclosure. On the other hand, it is found that there are significant positive associations between each of firm size and industry dummy, and tax disclosure. This means that company-specific characteristics are important factors affecting corporate tax disclosure. Research limitations/implications This study extends the work of previous studies by suggesting that the signalling theory and the agency theory are the main theories concerned with tax disclosure and corporate governance. The authors add an additional appreciation of the contribution of corporate governance from the interested parties’ tax disclosure evaluation in the Malaysian environment. Practical implications The evidence found by this study has important policy and practical knowledge implications for the authorities, researchers, decisionmakers and firm managers. The findings provide them with some relevant insights on the importance of corporate governance practices from the companies’ perspectives and contribute to the discussion of who verifies and deduces from tax disclosure directed by companies. Originality/value To the best of the authors’ knowledge, this study is the first attempt to examine the influence of the corporate governance internal mechanisms on tax disclosure in a developing nation like Malaysia. Although this paper focuses on a single country, it contributes significantly to the debate about tax disclosure in relation to “comply or explain”, as suggested in the Code of Corporate Governance. This study shows that companies are trying to avoid as far as possible disclosing tax-related information.

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Section: Resultssupporting

confidence: 90%

Corporate governance and tax disclosure phenomenon in the Malaysian listed companies

Mgammal

Bardai

Ismail

2018

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“…The result of the research conducted by [6] resulted in the conclusion that temporary differences have a significant and negative effect on tax disclosures. This is in line with [11] and [12], because deferred-tax obligations are not documented. However, these findings are inconsistent with [13], which linked the increase in temporary differences with an increase in aggressive tax-planning.…”

Section: Introductionsupporting

confidence: 89%

“…The information in this tax disclosures provides a signal to the stakeholders and shareholders of financial statements. [11] supports the relationship between temporary differences and tax disclosures. Based on the above discussion regarding temporary differences from tax saving to tax disclosures, the following hypothesis was formulated as follow: H2: Temporary differences have an effect on tax disclosures.…”

Section: Temporary Differences On Tax Disclosuresmentioning

confidence: 52%

Tax-Saving Components on Tax Disclosures

Apriliyan¹,

Trisnawati²,

Budiono³

2021

Proceedings of the Ninth International Conference on Entrepreneurship and Business Management (ICEBM 2020)

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The purpose of this study was to examine the influence of tax planning, as measured by the use of tax saving, consisting of permanent differences, temporary differences, foreign tax-rates differentials, and tax losses on tax disclosures. The sample in this study was 21 consumer good manufacturing companies listed in the Indonesia Stock Exchange (IDX) for 7 years (from 2012 to 2018). The results of this study are: 1) Permanent differences has an influence on tax disclosures, 2) Temporary differences has an influence on tax disclosures, 3) Foreign tax-rate differentials has no influence on tax disclosures, and 4) Tax losses have an influence on tax disclosures.

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“…We contribute to the literature about tax related information in the annual report. Previous studies indicate incomplete and not easily understandable disclosures about taxes that differ remarkably between companies (Evers et al, 2014;Kvaal and Nobes, 2013;Ready et al, 2011). In this study, we try to explain part of the variation.…”

Section: Resultsmentioning

confidence: 92%

Tax Loss Carryforward Disclosure and Uncertainty

Flagmeier

Mueller

2017

SSRN Journal

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We examine whether companies voluntarily disclose additional information about tax loss carryforwards when the recoverability is more uncertain. With this study, we aim to explain part of the huge cross-sectional variation in the tax footnote. To assess disclosure behavior, we hand collect data from notes of large German firms' IFRS financial statements and identify voluntarily disclosed information beyond the requirements of IAS 12. We find that uncertainty about the usability of tax losses has a significantly negative relation to the amount and quality of disclosure, controlling for other disclosure determinants derived from prior literature. These findings are robust for several indicators representing information and income uncertainty. Our findings suggest that managers anticipate the investors' need for more private information and disclose them voluntarily to send a signal of credibility to the market participants. It can be assumed that disclosing this information is less costly than facing potential risk premiums demanded by investors leading to higher cost of capital. This result indicates that part of the cross-sectional variation in the tax footnote can be explained by differing expectations to use the tax losses.

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Evidence on Book-Tax Differences and Disclosure Quality Based on the Notes to the Financial Statements

Cited by 9 publications

References 5 publications

Corporate governance and tax disclosure phenomenon in the Malaysian listed companies

Corporate governance and tax disclosure phenomenon in the Malaysian listed companies

Tax-Saving Components on Tax Disclosures

Tax Loss Carryforward Disclosure and Uncertainty

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