Journal article
Pre-Empting Disclosure? Firms' Decisions Prior to FIN No. 48
The Accounting review, Vol.85(3), pp.791-815
05/01/2010
DOI: 10.2308/accr.2010.85.3.791
Abstract
FIN No. 48, Accounting for Uncertainty in Income Taxes (FASB 2006), requires firms to disclose tax reserves and to record changes in tax reserves at adoption of FIN No. 48 as cumulative effect adjustments in stockholders' equity. We predict that between the enactment and adoption of FIN No. 48, relative to historical levels, firms settle disputes more often to potentially decrease visibility to the IRS and release reserves more often to reduce scrutiny and increase earnings (as opposed to retained earnings). We analyze 2005 and 2006 10-Qs and 10-Ks for the 100 largest nonfinancial, nonutility firms followed by analysts. Between enactment and adoption of FIN No. 48, relative to historical levels, firms report more settlements with tax authorities and release reserves more frequently. In addition, firms with higher IRS deficiencies are more likely to settle disputes. Between enactment and adoption of FIN No. 48, firms increased earnings by releasing $4.4 billion of tax reserves, nearly equaling the $4.5 billion released at adoption.
Details
- Title: Subtitle
- Pre-Empting Disclosure? Firms' Decisions Prior to FIN No. 48
- Creators
- Jennifer L. Blouin - University of PennsylvaniaCristi A. Gleason - University of IowaLillian F. Mills - The University of Texas at AustinStephanie A. Sikes - University of Pennsylvania
- Resource Type
- Journal article
- Publication Details
- The Accounting review, Vol.85(3), pp.791-815
- Publisher
- Amer Accounting Assoc
- DOI
- 10.2308/accr.2010.85.3.791
- ISSN
- 0001-4826
- eISSN
- 1558-7967
- Number of pages
- 25
- Language
- English
- Date published
- 05/01/2010
- Academic Unit
- Accounting
- Record Identifier
- 9984380430902771
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