The quality of tax accounting for financial reporting purposes: International evidence from the United Kingdom

Song, Qian and Holland, Kevin ORCID: https://orcid.org/0000-0002-0414-2503 2023. The quality of tax accounting for financial reporting purposes: International evidence from the United Kingdom. Journal of International Accounting, Auditing and Taxation 52 , 100564. 10.1016/j.intaccaudtax.2023.100564 Item availability restricted.

PDF - Accepted Post-Print Version Restricted to Repository staff only until 22 July 2025 due to copyright restrictions. Available under License Creative Commons Attribution Non-commercial No Derivatives. Download (1MB)

Abstract

The quality of tax accounting can be defined as the relationship between the annual tax expense reported in firms’ financial statements and future tax cashflows. As corporate income taxes have a material proportion of earnings, assessing the tax accounting quality can help financial statement users in evaluating future commitment to internal funds. While there is an emerging US-based literature on tax accounting quality, to the authors’ knowledge this is the first study to examine tax accounting quality outside of the US and the first under a regime governed by International Financial Reporting Standards. The results indicate that tax accounting quality is significantly lower for firms that engage in higher levels of tax management or have stronger earnings management pressure. While corporate governance mechanisms do not moderate the relationship between tax management and tax accounting quality, there is some evidence of a moderating effect in the relationship between earnings management pressure and tax accounting quality. In addition, we observe variations in tax accounting quality associated with a change in tax-related financial reporting standards.

Item Type:	Article
Date Type:	Publication
Status:	Published
Schools:	Business (Including Economics)
Publisher:	Elsevier
ISSN:	1061-9518
Date of First Compliant Deposit:	2 November 2022
Date of Acceptance:	29 October 2022
Last Modified:	23 Nov 2023 04:57
URI:	https://orca.cardiff.ac.uk/id/eprint/153946

Actions (repository staff only)

Edit Item