Noncompliance with Mandatory Disclosure Requirements: The Magnitude and Determinants of Undisclosed Permanently Reinvested Earnings

• 成果类型: Article
• 署名作者: Ayers, Benjamin C.; Schwab, Casey M.; Utke, Steven
• 署名单位: University System of Georgia; University of Georgia
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-50853
• 发表日期: 2015
• 页码: 59-93
• 关键词: voluntary disclosure; foreign earnings; discretionary disclosure; management; taxes; performance; INVESTMENT; cost

摘要

We develop estimates of a firm's foreign earnings designated as permanently reinvested (PRE) and the unrecorded deferred tax liability (TAX) associated with PRE that are independent of whether a firm explicitly discloses this information. We then investigate firms' noncompliance with Accounting Standards Codification (ASC) 740 provisions that require financial statement disclosure of PRE and either the tax associated with PRE or a statement that calculating the tax is not practicable. We find that a nontrivial portion of firms do not comply with the PRE disclosure requirements and that the amounts of undisclosed PRE and the related tax are substantial in magnitude. Cross-sectional evidence suggests managers opportunistically choose when to disclose PRE and TAX and that compliance with PRE disclosure requirements increased following the American Jobs Creation Act of 2004, which increased incentives to disclose PRE.