This paper develops a technique to infer the accuracy of analysts' forecasts of different components of earnings when databases contain forecasts of only bottom line (or limited component) earnings forecasts. We focus our analysis on three components - sales, operating profit percentage, and...

We investigate the effect of shareholder taxes on expected stock returns using a model that characterizes both the optimal portfolios of taxable and tax-exempt investors and the expected rates of return on risky stocks. When all income is taxed at the same effective rate, each investor's...

This paper investigates why LIFO firms have higher reported earnings-price (EP) ratios compared with non-LIFO firms, a result reported by Lee (1988). Observed cross-sectional differences in financial statement variables between LIFO and non-LIFO firms identified by prior research do not explain...

This article seeks to highlight significant U.S. federal income tax legislation in a manner that is useful to academics performing research in the field of finance. Taxes are a pervasive part of the current financial landscape, and as such it can be important for researchers to be aware of their...

We investigate the role of book-tax conformity in firms' financial reporting activities using a unique set of publicly traded firms that were forced to switch for tax purposes from the cash method to the accrual method. Prior to the mandated change, little tension existed between tax planning...