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The rise of deferred tax assets in Japan: The role of deferred tax accounting in the Japanese banking crisis

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  • Skinner, Douglas J.

Abstract

This paper provides evidence on the role of deferred taxes in the recent financial crisis among Japanese banks. Upon adoption of deferred tax accounting in FY1998, the major Japanese banks recognized net deferred tax assets of ¥6.6 trillion ($55 billion). Without these assets, the banks would have been insolvent. The evidence supports the conclusion that Japanese regulators used deferred tax accounting as part of a regulatory forbearance strategy, and that bank managers used these assets to bolster their banks' regulatory capital. The results show how ostensibly similar accounting rules can be implemented very differently, and so have implications for IFRS.

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  • Skinner, Douglas J., 2008. "The rise of deferred tax assets in Japan: The role of deferred tax accounting in the Japanese banking crisis," Journal of Accounting and Economics, Elsevier, vol. 46(2-3), pages 218-239, December.
  • Handle: RePEc:eee:jaecon:v:46:y:2008:i:2-3:p:218-239
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    Cited by:

    1. Chytis, Evangelos & Koumanakos, Evangelos & Siriopoulos, Costas, 2013. "Deferred Tax Positions under the prism of financial crisis and the effects of a corporate tax reform," EconStor Conference Papers 125775, ZBW - German National Library of Economics.
    2. Jannis Bischof & Ulf Brüggemann & Holger Daske, 2012. "Fair Value Reclassifications of Financial Assets during the Financial Crisis," SFB 649 Discussion Papers SFB649DP2012-010, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.
    3. repec:eee:joecas:v:11:y:2014:i:c:p:138-145 is not listed on IDEAS
    4. Hanlon, Michelle & Heitzman, Shane, 2010. "A review of tax research," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 127-178, December.
    5. repec:eee:crpeac:v:26:y:2015:i:c:p:141-156 is not listed on IDEAS
    6. repec:eee:accoun:v:52:y:2017:i:2:p:122-141 is not listed on IDEAS
    7. Kothari, S.P. & Ramanna, Karthik & Skinner, Douglas J., 2010. "Implications for GAAP from an analysis of positive research in accounting," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 246-286, December.
    8. Bertomeu, Jeremy & Magee, Robert P., 2011. "From low-quality reporting to financial crises: Politics of disclosure regulation along the economic cycle," Journal of Accounting and Economics, Elsevier, vol. 52(2), pages 209-227.

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