Tax Avoidance, Large Positive Temporary Book-Tax Differences, and Earnings Persistence

被引:105
作者
Blaylock, Bradley [1 ]
Shevlin, Terry [2 ]
Wilson, Ryan J. [3 ]
机构
[1] Oklahoma State Univ, Stillwater, OK 74078 USA
[2] Univ Washington, Seattle, WA 98195 USA
[3] Univ Iowa, Iowa City, IA 52242 USA
关键词
book-tax differences; earnings persistence; tax avoidance; earnings management; earnings expectations; CASH FLOWS; FUTURE EARNINGS; STOCK RETURNS; ACCRUALS; INFORMATION; MANAGEMENT; DETERMINANTS; PERFORMANCE;
D O I
10.2308/accr-10158
中图分类号
F8 [财政、金融];
学科分类号
0202 ;
摘要
We investigate why temporary book-tax differences appear to serve as a useful signal of earnings persistence (Hanlon 2005). We first test and show that temporary book-tax differences provide incremental information over the magnitude of accruals for the persistence of earnings and accruals. We then opine that there are multiple potential sources of large positive book-tax differences. We predict and find that firms with large positive book-tax differences likely arising from upward earnings management (tax avoidance) exhibit lower (higher) earnings and accruals persistence than do other firms with large positive book-tax differences. Finally, we find significant variation in current-period earnings and accruals response coefficients and insignificant hedge returns in period t+1, consistent with investors being able to look through to the source of large positive book-tax differences (earnings management and tax avoidance), allowing them to correctly price the persistence of accruals for these subsamples.
引用
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页码:91 / 120
页数:30
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