The Relevance of the Informational Content of Book-Tax Differences for Predicting Future Income: Evidence from Latin American Countries
This study aims to investigate whether the different types of book-tax differences are useful for predicting the future income of publicly traded companies in five Latin American countries. This is possible since these differences convey information about transitory components of income, which can b...
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Universidade de São Paulo
2016-04-01
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doaj-98d36318cd0f47c5adff4a7553ee3e152020-11-25T01:08:29ZengUniversidade de São PauloRevista Contabilidade & Finanças1808-057X2016-04-012770294210.1590/1808-057x201501570S1519-70772016000100029The Relevance of the Informational Content of Book-Tax Differences for Predicting Future Income: Evidence from Latin American CountriesAlessandra Vieira Cunha MarquesPatrícia de Souza CostaPablo Rogers SilvaThis study aims to investigate whether the different types of book-tax differences are useful for predicting the future income of publicly traded companies in five Latin American countries. This is possible since these differences convey information about transitory components of income, which can be used by investors for predicting future income. However, little is known about the relationship between tax variables and companies' future results. The sample analyzed here is composed of 580 publicly traded companies from five Latin American countries (Argentina, Brazil, Chile, Mexico, and Peru) with information available in the Economatica(r) database covering 2002 to 2013. In terms of methodology, regressions are employed in order to find a connection between the different types (total, permanent, temporary, and the negative and positive variations) of book-tax differences and companies' current and future earnings per share, as well as some control variables suggested by previous literature. The model's coefficients were estimated through panel data techniques: fixed effects. The results obtained suggest that the information gathered in the different types of book-tax differences (total, permanent, temporary, positive and negative variations) is relevant in predicting future income. Total, permanent and temporary differences contribute to the uncertainty in future income prediction, given that results are more transitory and less persistent in years with higher book-tax differences. Positive and negative variations, on the other hand, attribute higher income in coming years to greater variations in book-tax differences, representing increased timeliness of results and a reduction in off balance sheet funding for the publicly traded companies from these countries.http://www.scielo.br/scielo.php?script=sci_arttext&pid=S1519-70772016000100029&lng=en&tlng=enbook-tax diferencesrelevância dos números contábeisAmérica Latina |
collection |
DOAJ |
language |
English |
format |
Article |
sources |
DOAJ |
author |
Alessandra Vieira Cunha Marques Patrícia de Souza Costa Pablo Rogers Silva |
spellingShingle |
Alessandra Vieira Cunha Marques Patrícia de Souza Costa Pablo Rogers Silva The Relevance of the Informational Content of Book-Tax Differences for Predicting Future Income: Evidence from Latin American Countries Revista Contabilidade & Finanças book-tax diferences relevância dos números contábeis América Latina |
author_facet |
Alessandra Vieira Cunha Marques Patrícia de Souza Costa Pablo Rogers Silva |
author_sort |
Alessandra Vieira Cunha Marques |
title |
The Relevance of the Informational Content of Book-Tax Differences for Predicting Future Income: Evidence from Latin American Countries |
title_short |
The Relevance of the Informational Content of Book-Tax Differences for Predicting Future Income: Evidence from Latin American Countries |
title_full |
The Relevance of the Informational Content of Book-Tax Differences for Predicting Future Income: Evidence from Latin American Countries |
title_fullStr |
The Relevance of the Informational Content of Book-Tax Differences for Predicting Future Income: Evidence from Latin American Countries |
title_full_unstemmed |
The Relevance of the Informational Content of Book-Tax Differences for Predicting Future Income: Evidence from Latin American Countries |
title_sort |
relevance of the informational content of book-tax differences for predicting future income: evidence from latin american countries |
publisher |
Universidade de São Paulo |
series |
Revista Contabilidade & Finanças |
issn |
1808-057X |
publishDate |
2016-04-01 |
description |
This study aims to investigate whether the different types of book-tax differences are useful for predicting the future income of publicly traded companies in five Latin American countries. This is possible since these differences convey information about transitory components of income, which can be used by investors for predicting future income. However, little is known about the relationship between tax variables and companies' future results. The sample analyzed here is composed of 580 publicly traded companies from five Latin American countries (Argentina, Brazil, Chile, Mexico, and Peru) with information available in the Economatica(r) database covering 2002 to 2013. In terms of methodology, regressions are employed in order to find a connection between the different types (total, permanent, temporary, and the negative and positive variations) of book-tax differences and companies' current and future earnings per share, as well as some control variables suggested by previous literature. The model's coefficients were estimated through panel data techniques: fixed effects. The results obtained suggest that the information gathered in the different types of book-tax differences (total, permanent, temporary, positive and negative variations) is relevant in predicting future income. Total, permanent and temporary differences contribute to the uncertainty in future income prediction, given that results are more transitory and less persistent in years with higher book-tax differences. Positive and negative variations, on the other hand, attribute higher income in coming years to greater variations in book-tax differences, representing increased timeliness of results and a reduction in off balance sheet funding for the publicly traded companies from these countries. |
topic |
book-tax diferences relevância dos números contábeis América Latina |
url |
http://www.scielo.br/scielo.php?script=sci_arttext&pid=S1519-70772016000100029&lng=en&tlng=en |
work_keys_str_mv |
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