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The Recognition and Timing of Deferred Tax Liabilities

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  • A. Gaeremynck
  • L. Van De Gucht

Abstract

This paper examines the characteristics of firms that account for deferred tax liabilities related to government investment grants under an extended adoption timing period. Not only the recognition but also the timing decision is associated with changes in future performance and changes in the debt structure. Recognisers outperform non‐recognisers in the future, while early recognition is related to post recognition performance but only for those firms that currently perform well. Changes in the balance sheet structure are also related to both decisions. Firms with recent increases in the debt level tend to postpone recognition, while currently well‐performing firms that increase their future debt level are less likely to recognise deferred taxes.

Suggested Citation

  • A. Gaeremynck & L. Van De Gucht, 2004. "The Recognition and Timing of Deferred Tax Liabilities," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 31(7‐8), pages 985-1014, September.
    • Handle: RePEc:bla:jbfnac:v:31:y:2004:i:7-8:p:985-1014
    DOI: 10.1111/j.0306-686X.2004.00564.x
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    Cited by:

    1. Theodore E. Christensen & Gyung H. Paik & Earl K. Stice, 2008. "Creating a Bigger Bath Using the Deferred Tax Valuation Allowance," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 35(5‐6), pages 601-625, June.
    2. Anna Görlitz & Michael Dobler, 2023. "Financial accounting for deferred taxes: a systematic review of empirical evidence," Management Review Quarterly, Springer, vol. 73(1), pages 113-165, February.

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