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A cautionary alert - limited investors' guidance by small companies: as evidenced by FIN 48 related Topic 11.M disclosures within micro cap firms

Author

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  • Linda Campbell
  • Marshall K. Pitman

Abstract

The purpose of this study is to assess the factors associated with investor guidance required by SAB 74 (codified as SAB Topic 11.M) by 206 micro cap firms as they implement FIN 48. Logistic regression results support, overall, the expectation that industry affiliation is a significant predictor of the presence (or absence) of reliable investor guidance provided prior to FIN 48 adoption. On the other hand, the number of open tax years and the obligation of multi-state income tax reporting are not statistically significant predictors. Having an in-house tax department plays a significant role as a predictor of FIN 48 related Topic 11.M investor guidance. Corporate governance was found to be moderately significant in this prediction. This information may provide tax and SEC regulators, investors, managers and other interested parties with insight into possible issues micro caps may face as other major changes to the financial reporting arena are encountered.

Suggested Citation

  • Linda Campbell & Marshall K. Pitman, 2015. "A cautionary alert - limited investors' guidance by small companies: as evidenced by FIN 48 related Topic 11.M disclosures within micro cap firms," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 11(2), pages 107-129.
    • Handle: RePEc:ids:ijaape:v:11:y:2015:i:2:p:107-129
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