Information Content Of Deferred Tax Items

In 2006,the Ministry of Finance issued the "Enterprise Accounting Standards No.18——Income Tax".This criterion is temporarily implemented since January 1st,2007 in listed companies,which can only use the balance sheet liability method to treat the income tax.The promulgation of guidelines makes our tax treatment change.Based on the balance sheet,corporate calculate the difference between the book value of asset or liability and the tax basis of asset or liability,and then determine the differences as deductible temporary differences or taxable temporary differences.According to the differences,companies can confirm "deferred tax assets" or "deferred tax liabilities",which will be listed in the balance sheet.These changes provide a new way of thinking for investors making investment decisions.Therefore,the article will do empirical research about the impact of deferred income tax on enterprise value,the stock price and operating cash flow.This thesis firstly summarizes the domestic and foreign scholars' research about deferred income tax,finding that foreign scholars focus on using empirical research to verify the relevance between the balance sheet liability methods and accounting information,and the domestic scholars focus on comparing the tax treatment of the old and new accounting standards.Secondly,the study introduces the evolution of accounting for income tax,income tax calculation and accounting treatment,which will provide a theoretical basis for the later.Finally,the paper selects the relevant data of listed companies from 2009 to 2013 to make descriptive analysis of absolute variables and relative variables,and do empirical research about the impact of deferred income tax on enterprise value,the stock price and operating cash flow.Statistical analysis of this paper show that the absolute variables:deferred tax assets,net of deferred income tax assets increase year by year from 2009 to 2013 and deferred tax liabilities from 2009 to 2013 remain unchanged;relative variables:the proportion of deferred tax assets and total assets changes little from 2009 to 2013,the ratio of deferred tax liabilities and total liabilities continues to decline from 2009 to 2013,the ratio of net deferred tax assets and net assets continues to rise from 2009 to 2012,and fall in 2013.The empirical results show that:with the increase in deferred income tax assets,enterprise value,the stock price,operating cash flow will rise;as the proportion of deferred tax liabilities and total liabilities increases,the enterprise value will rise,while the stock price and operating cash flow will be reduced.Therefore,in decision-making process,investors can make use of the information reflected by deferred tax items to carry out more effective and scientific decision-making.