Financial accounting for deferred taxes: a systematic review of empirical evidence

Görlitz, Anna; Dobler, Michael

doi:10.1007/s11301-021-00233-w

Cited by 11 publications

(6 citation statements)

References 130 publications

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“…2, the trend shows that the United States (US) was the most popular country setting for corporate tax risk studies, accounting for 28 of the 37 articles (75.68%), followed by Australia and China (three articles each), Germany (two articles), and the international setting (one article) (more detailed information is available in the Appendix). This result is similar to the documentation by Görlitz and Dobler (2021) who have conducted a literature review on financial accounting for deferred taxes, where the US also provided the most popular context. Consequently, there are many avenues for future research to examine the corporate tax risk in non-US countries and/or international settings.…”

Section: Publication Trends In Corporate Tax Risk Researchsupporting

confidence: 88%

Corporate tax risk: a literature review and future research directions

Saragih

Ali

2021

Manag Rev Q

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Our study aims to analyze the current state of, and avenues for, future studies into the tax risk literature. The construct of the corporate tax risk (tax uncertainty) has increasingly begun to attract significant interest from both academics and practitioners. Most previous studies discussing corporate tax behavior have also focused on tax planning, tax avoidance, and tax evasion. Studies investigating the tax risk are still very limited and it is an underexplored subject. Examining the tax risk is crucial because it relates to the tax outcomes arising from a firm's taxation activities. Furthermore, analyzing the tax risk simultaneously with other tax behavior constructs may provide a deeper understanding. Despite the importance of the tax risk construct, there is no published literature review regarding the tax risk. Using a systematic review process, this study selected 37 articles published in 21 highly reputable journals listed in the Scopus database. The findings of this study are provided in two sections: (1) A discussion of the current studies of tax risk, including the theories, methods, and measurements of tax risk, its determinants and consequences; and (2) Recommendations for future research agendas. From the review, we find that tax risk research still tends to be limited and understudied; many relevant research gaps can be identified. Finally, we suggest several research directions into 12 themes: corporate governance, executive personal characteristics, executive compensation plans, ownership structure, firm-level characteristics, the external market, institutional factor, accounting and auditing, operating environment, regulators and regulation, reputational costs, and others.

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Section: Publication Trends In Corporate Tax Risk Researchsupporting

confidence: 88%

Corporate tax risk: a literature review and future research directions

Saragih

Ali

2021

Manag Rev Q

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“…Therefore, this evidence is consistent with the studies of Dechow (1994), Hanlon (2005) and Blaylock et al (2012), which found that large positive book-tax differences can arise from earnings management activities, while large negative book-tax differences do not tend to produce a significant impact on earning persistence. In addition, these results are consistent with the literature review developed by Görlitz and Dobler (2021) on earnings management, pointing out that deferred tax assets may be used as an indicator of upward earnings management. In this sense, the positive (deductible) book-tax differences can be interpreted as an indicator of earnings management practices for external stakeholders in order to mitigate information asymmetry problems.…”

Section: Discussionsupporting

confidence: 89%

“…Meanwhile, Blaylock et al (2012) found that firms with large positive book-tax differences, likely arising from upward earnings management (tax avoidance), exhibit lower earning persistence and accruals than other firms with large negative book-tax differences. In the same sense, Görlitz and Dobler (2021) mentioned that prior literature on earnings management show that deferred tax, namely deferred tax assets, may be an indicator of upward earnings management. Therefore, we consider that deductible temporary differences that produce deferred tax assets tend to reduce earnings quality, then we posit the following hypothesis: H2.…”

Section: Hypotheses Developmentmentioning

confidence: 89%

“…Accounting and tax regulations rely on different objectives and, for this reason, follow divergent paths (Hanlon 2005;Koubaa and Anis 2015;Görlitz and Dobler 2021), which justify different earnings. While accounting aims to provide information about entities to several stakeholders, in order to improve decision-making, taxation is an economic and social policy instrument that aims to finance the State budget.…”

Section: Book-tax Differences Contextmentioning

confidence: 99%

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Do Taxes Still Affect Earning Persistence?

Pereira

Gomes

et al. 2023

Administrative Sciences

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While financial statements are the primary source of information about a firm, they tend to be under earnings management practices, namely to avoid paying tax. Therefore, we aim to examine whether taxes still affect earning persistence in an era of prevalent digital information. For that purpose, we use book–tax differences considering the deductible temporary differences and the taxable temporary differences. In addition, we analyze which of the two earnings components are more affected by taxes, specifically cash flow or accruals. We estimate econometric regressions using panel data to test our hypotheses. Through a sample of 421 small- and medium-sized (SME) Portuguese firms, between 2016 and 2020, we found empirical evidence that earning persistence tends to be lower when deductible temporary differences increase, while taxable temporary differences produce no statically significant effect. Furthermore, our results suggest that cash flow component increases more earning persistence than accruals. Therefore, deductible temporary difference may be an indicator of earnings management activities in these firms. These results are relevant, given the potential negative consequences of earnings management for the efficient decision making of stakeholders and even more because SMEs represent a substantial number of firms in European countries, particularly in Portugal.

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“…valuation allowance) к счету ОНА [8]. В IAS 12 подобного требования нет, в связи с чем А. Гёрлитц и М. Доблер делаю т вывод, что в международном стандарте используется аффирмативный под ход [9], предполагающий, что специалист напрямую корректирует сальдо отложенных налогов. Недо статки и положительные стороны указанных процедур подробно не рассматриваю тся в данной работе.…”

Section: обзор литературы и результаты исследованияunclassified

Tax loss carryforwards: valuation of deferred tax assets

AKSENT'EV

2023

Vestnik universiteta

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In the article, a comparative analysis of modern approaches to the assessment of deferred tax assets recognized for tax losses is carried out. The ambiguity of tax losses as an object of accounting observation is substantiated. Positive and negative effects of tax losses that do not allow to objectively qualify tax benefits as assets in accordance with conceptual criteria for their recognition are characterised. Prospective and retrospective factors for assessing the future recovery of deferred tax assets are presented. An example of accounting entries regarding recognition and recovery of tax losses using a valuation account is provided. The timing of prospective analysis is justified. Conservative and affirmative approaches to the assessment of tax losses in the financial accounting system are described. Based on the findings of the study, conclusions are given, and lines of future research are suggested.

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Financial accounting for deferred taxes: a systematic review of empirical evidence

Cited by 11 publications

References 130 publications

Corporate tax risk: a literature review and future research directions

Corporate tax risk: a literature review and future research directions

Do Taxes Still Affect Earning Persistence?

Tax loss carryforwards: valuation of deferred tax assets

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