Evidence for the Possible Information Loss of Conforming Book Income and Taxable Income*

By Michelle Hanlon, Stacie Kelley Laplante, Terry Shevlin. Journal law and economy, 2005

288 citations recorded by the source corpus.

Subfields: Accounting, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/402a9a1becf00ae000192948ea2be92c16e6e318

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Citations in the corpus

Earnings Management, Corporate Tax Shelters, and Book-Tax Alignment (2009, unknown): “23 See, for example, Hanlon, LaPlante, and Shevlin (2005).”
The association between book-tax conformity and earnings management (2014, unknown): “…is that we test the effect of book-tax conformity on manager behavior (earnings management) rather than on the potential effects of management’s behavior on various earnings attributes such as earnings persistence (Atwood et al. 2010), earnings response coefficients (Hanlon et al. 2005, 2008), etc.”
Rank and File Employees and the Discovery of Misreporting: The Role of Stock Options (2016, unknown): “Consistent with Hanlon et al. (2005), we estimate taxable income as [(federal tax expenseþforeign tax expense)/top marginal corporate rate] - ΔNOL carryforward.”
An unintended consequence of book-tax conformity: A loss of earnings informativeness (2008, methodology): “…by political, social, and economic objectives rather than the information needs of investors (Scholes et al, 2005; Manzon 5 Note also that Hanlon et al. (2005) have to estimate taxable income from financial statement information (and this information is only disclosed and not recognized).”
Understanding Earnings Quality: A Review of the Proxies, Their Determinants and Their Consequences (2010, background): “Baber et al. (2006) find that the market discount that investors apply to earnings that are likely to be upwardly managed declines when balance sheet information is disclosed concurrent with the earnings announcement.46 Hanlon et al. (2005) provide related evidence.”
A review of tax research (2010, unknown): “The authors extend Hanlon et al. (2005) and document that taxable income has more incremental information relative to book when tax planning is less likely and earnings management is more likely.”
Taxable income as a performance measure: The effects of tax planning and earnings quality (2009, unknown): “Although each of these issues contributes to potential measurement error in our estimate of taxable income, as in Hanlon et al. 2005, the first three issues should not affect our inferences (see Appendix A of Hanlon et al. 2005 for a detailed discussion related to the current setting), and lack of…”
Is Tax Avoidance Related to Firm Risk (2017, background): “This is consistent with the findings reported by Hanlon, Laplante, and Shevlin (2005) and Thomas and Zhang (2014) that suggest that a firm’s tax rate provides incremental information regarding future stock returns.”