Abstract

http://ssrn.com/abstract=1686036
 
 

Citations (2)



 


 



Is There Information Content in the Tax Footnote?


Jana Smith Raedy


University of North Carolina at Chapel Hill

Jeri K. Seidman


University of Texas at Austin - McCombs School of Business

Douglas A. Shackelford


University of North Carolina Kenan-Flagler Business School; National Bureau of Economic Research (NBER)

December 17, 2011


Abstract:     
This paper assesses the extent to which the disaggregated book-tax differences (BTDs) detailed in the tax footnote are associated with earnings persistence and growth, and the extent to which these associations matter to investors. Using hand-collected data from the schedule of deferred tax assets and liabilities and rate reconciliations in the tax footnotes of the Fortune 250 from 1993 to 2007, we find associations between various BTDs and persistence and future growth in earnings. However, we find no evidence that the market prices the BTDs that are associated with earnings persistence and growth differently from other BTDs. The results are consistent with investors ignoring the details in the tax footnote, because the tax footnote is complex, requires accounting and tax expertise, may be obfuscated to protect proprietary information from the taxing authority, and/or is not prominently displayed in the financial statements.

Number of Pages in PDF File: 58

Keywords: book-tax differences, tax footnote, information content

JEL Classification: G12, H25, K34, M41

working papers series





Download This Paper

Date posted: October 3, 2010 ; Last revised: September 20, 2012

Suggested Citation

Raedy, Jana Smith and Seidman, Jeri K. and Shackelford, Douglas A., Is There Information Content in the Tax Footnote? (December 17, 2011). Available at SSRN: http://ssrn.com/abstract=1686036 or http://dx.doi.org/10.2139/ssrn.1686036

Contact Information

Jana Smith Raedy
University of North Carolina at Chapel Hill ( email )
McColl Building
Chapel Hill, NC 27599-3490
United States
919-962-7475 (Phone)
919-962-4727 (Fax)

Jeri K. Seidman
University of Texas at Austin - McCombs School of Business ( email )
Austin, TX 78712
United States
Douglas A. Shackelford (Contact Author)
University of North Carolina Kenan-Flagler Business School ( email )
Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States
919-962-3197 (Phone)
919-962-4727 (Fax)

National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Feedback to SSRN


Paper statistics
Abstract Views: 1,407
Downloads: 316
Download Rank: 26,031
Citations:  2

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo5 in 0.281 seconds