Research On The Influence From The Deferred Income Taxes To The Quality Of The Financial Reports’ Information

From the perspective of the development of the income tax accounting standards, both SFAS No.109and IAS No.12stipulate clearly that process the income taxes with the balance sheet liability method. This illustrates that the investors in capital markets compared to the previous paying more attention to the financial situation of enterprises and long-term operating results for the strategic decisions of the competitive market. Therefore, the deferred income tax assets and the deferred tax liabilities, which are consistent with the definition of the assets and liabilities, more reflect in the philosophy of "the concept of balance sheet". In the trend of income measurement concept from the concept of revenue-expense to the concept of asset-liability, at the beginning of2007, we started to implement the "Accounting Standards for Enterprises No.18-Income tax" which reflects the concept of asset-liability, whose promulgation and implementation reflects the international convergence of our income tax accounting treatment.The promulgation and implementation of the income tax accounting standards changed our accounting treatment of the income tax, which affects the quality of the income tax accounting information. Since the Accounting Standards for Enterprises promulgation and implementation, researching on the relationship between the deferred income tax and the quality of the financial statements has been still rare. The main analysis have been around the comparison before and after the implementation of the Income Tax Accounting Standard No.18, the domestic and foreign income tax accounting standards and the interpretation of the Income Tax Accounting Standard No.18.With the international trends of the asset-liability concept, we have implemented the balance sheet liability method for many years. This article use the method both the normative analysis and the empirical analysis, analyze around the deferred income tax assets and the deferred income tax liabilities, combine with some substitution variables to quantify the reliability and the correlation of the financial reporting information. From many perspectives, analyze the effection of the income tax accounting standards. Eventually we get the following conclusions:in terms of reliability, using the balance sheet liability method will make income tax significantly associate with the reliability of accounting information. It prove that the implementation of income tax accounting standards may help improving the reliability of financial information. In terms of correlation, the deferred income tax expense and the correlation of accounting information (ie shares) show a Obvious relationship, which prove that the deferred income tax make a certain contribution for improving the quality of financial information. Also it believes that the enterprise may do earnings management through controlling the deferred income tax, thereby, reduce the quality of financial reports’ information.