An investigation of earnings management by firms in the adoption of SFAS 109, "Accounting for income taxes" /
The Financial Accounting Standards Board (FASB) allows
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| Format: | Thesis Book |
| Language: | English |
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[Place of publication not identified] :
[publisher not identified] ;
1997.
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| Online Access: | http://proxy.library.tamu.edu/login?url=http://proquest.umi.com/pqdweb?did=739839911&sid=1&Fmt=2&clientId=2945&RQT=309&VName=PQD |
| Summary: | The Financial Accounting Standards Board (FASB) allows extended adoption periods for most of its new accounting standards. For Statement of Financial Accounting Standard (SFAS) No. 96, "Accounting for Income Taxes," and SFAS 109 (same name), the FASB allowed two methods for reporting the change in accounting method in the current year financial statements. This change created a choice regarding the timing of adoption and its financial statement presentation, even though adoption of the Standard was mandatory. The differences in these choices are the focus of this paper. Specifically, this study attempts to identify factors that help to explain a firm's SFAS 109 adoption timing choice and reporting method choice. This study uses various univariate and multivariate tests to determine which factors influenced these decisions. The analysis includes investigation of the relationships among the timing choice and changes in earnings, managers' incentive bonus plans, the prior method of accounting for income taxes, management ownership of the firm, the closeness to debt covenants, prior purchase-method acquisitions, and tax assets and valuation allowances. The analysis evaluates the reporting method choice relative to changes in earnings, the prior method of accounting for income taxes, management ownership of the firm, the closeness to debt covenants, and prior purchase-method acquisitions. The results indicate that early and mandatory adopters differ in the change in earnings and return on sales from previous years, the size of the cumulative effect, the closeness to debt covenants, tax assets, and valuation allowances. The multivariate analysis suggests that the variables most closely related to the adoption timing decision are closeness to debt covenants, tax assets and valuation allowances. The results for the reporting method choice are less conclusive because of the limited number of restatement method adopters in the sample. The statistical power of the tests is a concern. Descriptive analysis indicates that restatement method firms were generally smaller and reported a larger percentage of management ownership than cumulative method firms. |
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| Item Description: | Vita. "Major Subject: Accounting". |
| Physical Description: | viii, 93 leaves ; 28 cm. Issued also on microfiche from University Microfilms Inc. |
| Bibliography: | Includes bibliographical references: pages 89-92. |