Sustainable Tax Paid Rate and Earnings Persistence in Tehran Stock Exchange

Authors

Abstract

     Sustainable tax paid rate
focuses on maintaining consistent tax avoidance outcomes over time.
Sustainability differs from tax minimization. This study examines whether
Sustainable tax paid rate provides information about the persistence of a
firm’s pre-tax earnings and earnings components in Tehran Stock Exchange.
This study uses the coefficient of variation of annual cash effective tax
rate and coefficient of variation of annual cash taxes paid to proxy for a sustainable tax paid rate. The sample containing 54 firms over the period
2002–2011. The results suggest that firms with more sustainable tax
don’t show more persistent pre-tax earnings and earnings components.     

Keywords


حساس یگانه، یحیی و مجتبی گل محمدی شورکی. (1390). رابطه بین نرخ موثر مالیات و ویژگی های شرکت ها. پژوهشنامه مالیات، 19 (12)، 239-264.
خدامی‌پور، احمد و علی ترک‌زاده‌ماهانی. (1390). مالیات و محافظه کاری در گزارشگری مالی و مربوط بودن اطلاعات حسابداری. پژوهش‌های حسابداری مالی، 3 (9)، 127-145.
صفاریزدی، حسن. (1389). بررسی تحلیلی ارتباط میان تغییرات اقلام صورتهای مالی و تغییرات مالیات در شرکت‌های پذیرفته شده در بورس اوراق بهادار تهران. پژوهشنامه مالیات، شماره 9، 165-198.
Ayers, B., J. Jiang, and P. Yeung. (2006). Discretionary accruals and earnings management: An analysis of pseudo earnings targets. The Accounting Review 81 (3): 617-652.
Blaylock, B., Shevlin, T., and R. Wilson. (2012). Tax avoidance, large positive book-tax differences, and earnings persistence. The Accounting Review, forthcoming.
Bryant-Kutcher, L., D. Guenther, and D. Jones. (2011). The persistence and valuation of tax-related earnings changes. Working paper, Colorado State University, University of Oregon, and College of William and Mary.
Chen, S., X. Chen, Q. Cheng, and T. Shevlin. (2010). Are family firms more tax aggressive than non-family firms? Journal of Financial Economics 95: 41-61.
Cohen, D., M. Darrough, R. Huang, and T. Zach. (2011). Warranty reserve: Contingent liability, information signal, or earnings management tool? The Accounting Review 86 (2): 569-604.
Dichev, I. and V. Tang. (2009). Earnings volatility and earnings persistence. Journal of Accounting and Economics 47 (1): 160-181.
Dichev, I., J. Graham, C. Harvey, and S. Rajgopal. (2012). Earnings quality: Evidence from the field. Working paper, Emory University and Duke University.
Dryeng, S., Hanlon, M., and E. Maydew. (2008). Long-run corporate tax avoidance. The Accounting Review 83 (1): 61-82.
Dyreng, S., Hanlon, M., and E. Maydew. (2010). The effects of executives on corporate tax avoidance. The Accounting Review 85 (4): 1163-1189.
Erickson, M., M. Hanlon, and E. Maydew. (2004). How much will firms pay for earnings that do not exist? Evidence of taxes paid on allegedly fraudulent earnings. The Accounting Review 79 (2): 387-408.
Frank, M., L. Lynch, and S. Rego. (2009). Tax reporting aggressiveness and its relation to aggressive financial reporting. The Accounting Review 84 (2): 467-96.
Hanlon, M. (2005). The persistence and pricing of earnings, accruals, and cash flows when firms have large book-tax differences. The Accounting Review 80 (1): 137-166.
Hanlon, M. and J. Slemrod. (2009). What does tax aggressiveness signal? Evidence from stock price reactions to news about tax shelter involvement. Journal of Public Economics 93: 126-141.
Lev, B. and D. Nissim. (2004). Taxable income, future earnings, and equity values. The Accounting Review 79 (4): 1039-1074.
McGuire, S. T., S. S Neuman and T. C. Omer. (2012a). Sustainable Tax Strategies and Earnings Persistence, available at: http://ssrn.com/abstract=1950378
McGuire, S. T., S. S Neuman and T. C. Omer. (2012b). Through the Looking Glass: Are Sustainable Tax Strategies Reflected in Earnings Persistence?, available at: http://ssrn.com/abstract=1950378
Schmidt, A. (2006). The persistence, forecasting, and valuation implications of the tax change component of earnings. The Accounting Review 81 (3): 589-616.
Scholes, M., M. Wolfson, M. Erikson, E. Maydew, and T. Shevlin. (2008). Taxes and Business Strategy: A Planning Approach. 4th ed. Upper Saddle River, NJ: Pearson Prentice Hall.
Shackelford, D., and T. Shevlin. (2001). Empirical tax research in accounting. Journal of Accounting and Economics 31: 321-387.
Neuman, s., s. Omer, T., C. Shelley, M., K. (2012). Corporate Transparency, Uncertain Tax Activities, and Sustainable Tax Strategies. available at: http://ssrn.com/abstract=2184892