Income Tax Accounting Policy Choice: Exposure Draft Responses and the Early Adoption Decision by Canadian Companies

53 Pages Posted: 29 Sep 2006

See all articles by Merridee L. Bujaki

Merridee L. Bujaki

Carleton University - Eric Sprott School of Business

Bruce J. McConomy

Wilfrid Laurier University

Abstract

We extend prior literature through a detailed examination of the relationship between lobbying behaviour and subsequent accounting standard adoption timing, using changes to a Canadian accounting standard with a prolonged transition period. We develop a model linking lobbying and adoption timing, and test hypotheses based upon recontracting costs, information production costs, efforts to manage investor perceptions and corporate governance practices. Our findings indicate that early adoption appears to be most prevalent for firms that benefit from improved financial statement performance. In contrast, late adopters tend to be firms that have lobbied standard setters regarding the out-of-pocket costs of the standard and those that rate highly on certain Corporate Governance measures.

Keywords: Lobbying, Early adoption, Income taxes, Corporate governance

JEL Classification: G35, M41, M44, G38

Suggested Citation

Bujaki, Merridee L. and McConomy, Bruce J., Income Tax Accounting Policy Choice: Exposure Draft Responses and the Early Adoption Decision by Canadian Companies. Canadian Accounting Perspectives, Forthcoming. Available at SSRN: https://ssrn.com/abstract=933379

Merridee L. Bujaki (Contact Author)

Carleton University - Eric Sprott School of Business ( email )

1125 Colonel By Drive
Ottawa, Ontario K1S SB6
Canada
613-520-2600 x2774 (Phone)

Bruce J. McConomy

Wilfrid Laurier University ( email )

Waterloo, Ontario N2L 3C5
Canada
519-884-0710, x2890 (Phone)
519-884-0201 (Fax)

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