<p> Although deferred tax liabilities represent a significant liability for most firms, prior research provides mixed evidence concerning investors' valuation of these items. Using an expanded data set of hand-collected tax footnotes, I examine (1) whether investors recognize depreciation-related deferred tax liabilities as economic burdens, and if so, (2) how investors measure the effect of these liabilities. I find evidence suggesting that investors price depreciation-related deferred tax liabilities as economic burdens and show that my primary findings are robust to the use of a changes-based methodology. I also examine various factors that could affect investors' measurement of these liabilities. In doing so, I develop a new method to identify tax-sensitive firms to implement my tests. This method incorporates forward-looking profit expectations without a look-ahead bias. Finally, I provide evidence of circumstances where investors discount deferred tax liabilities despite current accounting standards prohibiting managers from discounting these deferred tax liabilities in the reported financial statements. As depreciation-related deferred tax liabilities are among the largest and most common deferred tax liabilities, my study provides important insights into investors' valuation of firms' tax planning.</p><p>
| Identifer | oai:union.ndltd.org:PROQUEST/oai:pqdtoai.proquest.com:10748935 |
| Date | 05 June 2018 |
| Creators | Hamilton, John Russell |
| Publisher | The University of Arizona |
| Source Sets | ProQuest.com |
| Language | English |
| Detected Language | English |
| Type | thesis |
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