Research On The Quality Of Accounting Information Of Deferred Taxes

Accounting Standards for Business Enterprises issued in2006. It required enterprises in China to use the balance sheet method to calculate deferred tax. This is a big progress in accounting approach dealing with deferred tax and it has achieved substantial convergence with International Accounting Standards. The revolution of accounting methods about deferred tax must have significant influence on enterprises’ behaviors of financial reporting. Considering the background, this paper focuses on the quality of accounting information of deterred tax.At first, this paper describes the rules in new Accounting Standards for Business Enterprises about deferred tax. And it explains the concepts and researching method of quality of accounting information mainly including relevance and reliability. Then it uses the data of listed companies in Chinese stock market during2008to2013as sample, to examine the quality of accounting information of deferred tax. The research on relevance uses the Ohlson model to examine the deferred tax. As for reliability, the paper uses Basu model to examine deferred tax, deferred tax assets (DTAs) and deferred tax liabilities (DTLs) respectively.The major conclusions are as follow:Firstly, under balance sheet method, deferred tax has incremental value relevance. The DTAs has positive relationship with company value while DTLs has negative relationship with company value. After the controlling variables is introduced, the results are still significant. Secondly, the reliability test finds that deferred tax has incremental reliability. Compared with the DTAs, companies mainly improve reliability by DTLs. That is the DTAs’reliability is not significant while DTLs have positive relationship with reliability.The possible contribution of this paper is as follow:Firstly, the analysis of deferred tax’s recognition and disclosure in listed companies and the research on influence factors and financial effect establish understanding of deferred tax preliminarily. Secondly, the research of accounting information quality of deferred tax from relevance and reliability, especially the test of reliability using related model enriches literature about empirical research. Thirdly, according to conclusions and reality, this paper raises improvement suggestions during the implementation of balance sheet method.