Tax-Motivated Loss Shifting

• 成果类型: Article
• 署名作者: Erickson, Merle M.; Heitzman, Shane M.; Zhang, X. Frank
• 署名单位: University of Chicago; University of Rochester; Yale University
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-50496
• 发表日期: 2013
• 页码: 1657-1682
• 关键词: earnings management; analysts; INFORMATION; FIRMS; benefits; income; debt

摘要

This paper examines the implications of tax loss carryback incentives for corporate reporting decisions and capital market behavior. During the 1981 through 2010 sample period, we find that firms increase losses in order to claim a cash refund of recent tax payments before the option to do so expires, and we estimate that firms with tax refund-based incentives accelerate about $64.7 billion in losses. Tax-motivated loss shifting is reflected in both recurring and nonrecurring items and is more evident for financially constrained firms. Analysts do not generally incorporate tax-motivated loss shifting into their earnings forecasts, resulting in more negative analyst forecast errors for firms with tax-based incentives than for firms without. Holding earnings surprises constant, however, investors react less negatively to losses reported by firms with tax loss carryback incentives.