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The Financial Crisis and the Value‐relevance of Recognised Deferred Tax Assets
Author(s) -
Badenhorst Wessel M.,
Ferreira Petri H.
Publication year - 2016
Publication title -
australian accounting review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.551
H-Index - 36
eISSN - 1835-2561
pISSN - 1035-6908
DOI - 10.1111/auar.12101
Subject(s) - relevance (law) , accounting , financial crisis , sample (material) , deferred tax , business , economics , value (mathematics) , accounting information system , state income tax , tax reform , public economics , gross income , macroeconomics , political science , law , chemistry , chromatography , machine learning , computer science
The objective of this study is to consider if the value‐relevance of recognised deferred tax assets, which often represent unused tax losses, was affected by the financial crisis. A regression analysis of a sample of Australian and United Kingdom firms reveals that the value‐relevance of recognised deferred tax assets was affected by the financial crisis. However, the impact of the financial crisis differed between the sample countries. The study shows that a plausible explanation for this difference might be found in the tax law of the two countries. Findings of this paper will be of interest to regulators and standard setters, as they highlight how interaction between accounting requirements and tax law affects the relevance of accounting and tax information.