Although tax values of corporate assets and liabilities can be relevant for economic decisions, they are typically unknown to financial statement users. Tax values permit to conduct empirical studies about exercise of IFRS and tax options. Furthermore, the level of tax loss carryforwards and tax...

SFAS 109, Accounting for income taxes, was criticized for allowing firms to set arbitrarily high valuation allowances against deferred tax assets at adoption as quot;hidden reservesquot; that firms could use in future periods to manage earnings. Consistent with these claims, bank managers make...

In the context of the statutory tax rate reductions enacted in the Tax Reform Act of 1986, this paper investigates the degree to which capital market participants anticipate and correctly interpret temporary income effects of tax-motivated income shifting. We find evidence consistent with...

I investigate the role of book-tax differences in indicating the persistence of earnings, accruals, and cash flows for one-period-ahead earnings. I also examine whether the level of book-tax differences influences investors' assessments of future earnings persistence. I find that firm-years with...

This paper examines the consequences of expectations management for the usefulness of analyst forecasts in firm valuation. Specifically, I compare the performances of valuation models estimated using manipulated versus non-manipulated forecasts to predict firms' intrinsic values. The results...

This paper investigates whether the pattern of quarterly earnings changes provides a signal of earnings management. We identify firms for which the sign of (seasonal) earnings changes observed in interim quarters reverses in the fourth quarter. We hypothesize that a firm performing poorly in...

Manipulation of earnings or analyst earnings expectations is costly to firms. Manipulators of earnings and/or analyst earnings expectations therefore are likely to report earnings that precisely meet or narrowly beat analyst earnings forecasts, resulting in a zero or small positive earnings...

The separation of leases into operating and finance leases for accounting purposes can result in incentives to favour operating lease contracts since they avoid on-balance sheet debt. The IASB is conducting an active research project on leasing, following the G4+1 group's research on possible...

Given the recent controversy over deviations of street earnings from GAAP earnings, we show that the nonrecurring items that analysts include in street earnings are more persistent and have higher valuation multiples than those items they exclude from street earnings. In addition, we find no...

This paper investigates the role of earnings per share management in the decision to repurchase shares. We identify the conditions under which repurchases increase EPS and document the frequency of EPS increasing and EPS decreasing repurchases among U.S. firms from 1988 to 2001. We then compare...