Knowledge that Transforms

This paper investigates the relation between levels of industry competition and managers' choices of which operations to report as business segments. One reason managers have objected to segment disclosures is that these disclosures allegedly provide commercially valuable information to competitors that is not available elsewhere. This objection might seem to imply that managers are most reluctant to provide segment disclosures for operations in highly competitive industries; however, if abnormally high earnings tend to occur in less competitive industries, managers' segment reporting discretion may be exercised to avoid reporting these operations as business segments. Using a sample of 929 firms reporting business segments in their annual reports during 1987 to 1991, I estimate a logit model of management's decision to report operations in a given industry as a segment as a function of two measures of industry competition: the four-firm concentration ratio and a measure of the speed of profit adjustment. The

Richard A. Lambert, Customer Satisfaction and Future Financial Performance Discussion of are Nonfinancial Measures Leading Indicators of Financial Performance? An Analysis of Customer Satisfaction, Journal of Accounting Research, Vol. 36, Studies on Enhancing the Financial Reporting Model (1998), pp. 37-46

Analysts, Analyst coverage, Analyst forecast, Trading commissions

57 2.5.3.5 Interaction Effects: Tax Variables 58 10

D. Eric Hirst, Patrick E. Hopkins, Comprehensive Income Reporting and Analysts' Valuation Judgments, Journal of Accounting Research, Vol. 36, Studies on Enhancing the Financial Reporting Model (1998), pp. 47-75

Thomas Hemmer, Steve Matsunaga, Terry Shevlin, Optimal Exercise and the Cost of Granting Employee Stock Options with a Reload Provision, Journal of Accounting Research, Vol. 36, No. 2 (Autumn, 1998), pp. 231-255

The Value Relevance of Intangibles: The Case of Software Capitalization Author(s): David Aboody and Baruch Lev Source: Journal of Accounting Research, Vol. 36, Studies on Enhancing the Financial Reporting Model (1998), pp. 161-191 Published by: Blackwell Publishing on behalf of Accounting Research Center, Booth School of Business, University of Chicago Stable URL: http://www.jstor.org/stable/2491312 Accessed: 14/09/2010 16:12

Taxation, Book-Tax conformity , IRS, Earnings management

Voluntary disclosure, Management forecasts, Disclosure costs, Disclosure policy

Using a model of corporate investment in which the deferred tax liability never reverses, I show that deferred taxes are a real economic burden whose value is the amount recognized multiplied by a fraction. The numerator of the fraction is the tax depreciation rate, and the denominator of the fraction is the sum of the tax depreciation rate and the cost of capital. Despite the requirement in Statement of Financial Accounting Standards No. 109: Accounting for Income Taxes (FASB [1992]), that a deferred tax liability or asset be recognized to reflect temporary differences between the book value and tax basis of assets, the valuation relevance of deferred taxes is an open question. Davidson [1958] shows that the deferred tax liability will grow indefinitely as long as investments generate new temporary differences at least as large as the temporary differences that reverse. Because deferred taxes are paid in the future but not discounted, their recognized values on financial statements are generally regarded to be overstated. Some have suggested their value is zero if the deferred tax liability never reverses; these arguments are cited in Stickney [1993,