Deferred tax and earnings management under MASB 25 / Noor Hasimah M. Yacob, Nor'Azam Mastuki and Rohaya Md Noor

This paper investigates whether Malaysian publicly listed companies in 10 sectors use deferred tax and discretionary accruals as tools to manage earnings in order to meet earning targets: 1) to avoid an earning decline and 2) to avoid a loss. This research examines financial statements prepared dur...

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Main Authors: M. Yacob, Hasimah, Mastuki, Nor'azam, Md Noor, Rohaya
Format: Article
Language:English
Published: Research Management Institute (RMI) 2011
Subjects:
Online Access:http://ir.uitm.edu.my/id/eprint/13099/
http://ir.uitm.edu.my/id/eprint/13099/1/AJ_NOOR%20HASIMAH%20M.%20YACOB%20SMRJ%2011%201.pdf
id uitm-13099
recordtype eprints
spelling uitm-130992016-06-30T06:27:13Z http://ir.uitm.edu.my/id/eprint/13099/ Deferred tax and earnings management under MASB 25 / Noor Hasimah M. Yacob, Nor'Azam Mastuki and Rohaya Md Noor M. Yacob, Hasimah Mastuki, Nor'azam Md Noor, Rohaya Balance sheet. Financial statements. Corporation reports. Including pro forma statements Financial management. Business finance. Corporation finance This paper investigates whether Malaysian publicly listed companies in 10 sectors use deferred tax and discretionary accruals as tools to manage earnings in order to meet earning targets: 1) to avoid an earning decline and 2) to avoid a loss. This research examines financial statements prepared during the period 2003 to 2005 when the Malaysian Accounting Standard Board (MASB) 25 Accounting for Income Taxes was in place. This study uses Burgstahler and Dichev's approach to identify earnings management firms. Healy's model and a modified Jones model are also employed to identify and separate accruals. The results show no evidence that deferred tax has been used by firms as a tool to manage earnings during the period of study. The finding suggests that the implementation of the MASB 25 (now known as Financial Reporting Standard (FRS) 112), which is more comprehensive and specific than lAS 12, has reduced the use of deferred tax by firms in managing their earnings. In contrast, the findings of this study provide evidence that firms use discretionary accruals to avoid reporting losses. The results ofthis study may be of use to researchers studying earnings management behavior and for standard setters with regard to establishing and monitoring standards. Research Management Institute (RMI) 2011 Article PeerReviewed text en http://ir.uitm.edu.my/id/eprint/13099/1/AJ_NOOR%20HASIMAH%20M.%20YACOB%20SMRJ%2011%201.pdf M. Yacob, Hasimah and Mastuki, Nor'azam and Md Noor, Rohaya (2011) Deferred tax and earnings management under MASB 25 / Noor Hasimah M. Yacob, Nor'Azam Mastuki and Rohaya Md Noor. Social and Management Research Journal, 8 (2). pp. 57-74. ISSN 1675-7017
repository_type Digital Repository
institution_category Local University
institution Universiti Teknologi MARA
building UiTM Institutional Repository
collection Online Access
language English
topic Balance sheet. Financial statements. Corporation reports. Including pro forma statements
Financial management. Business finance. Corporation finance
spellingShingle Balance sheet. Financial statements. Corporation reports. Including pro forma statements
Financial management. Business finance. Corporation finance
M. Yacob, Hasimah
Mastuki, Nor'azam
Md Noor, Rohaya
Deferred tax and earnings management under MASB 25 / Noor Hasimah M. Yacob, Nor'Azam Mastuki and Rohaya Md Noor
description This paper investigates whether Malaysian publicly listed companies in 10 sectors use deferred tax and discretionary accruals as tools to manage earnings in order to meet earning targets: 1) to avoid an earning decline and 2) to avoid a loss. This research examines financial statements prepared during the period 2003 to 2005 when the Malaysian Accounting Standard Board (MASB) 25 Accounting for Income Taxes was in place. This study uses Burgstahler and Dichev's approach to identify earnings management firms. Healy's model and a modified Jones model are also employed to identify and separate accruals. The results show no evidence that deferred tax has been used by firms as a tool to manage earnings during the period of study. The finding suggests that the implementation of the MASB 25 (now known as Financial Reporting Standard (FRS) 112), which is more comprehensive and specific than lAS 12, has reduced the use of deferred tax by firms in managing their earnings. In contrast, the findings of this study provide evidence that firms use discretionary accruals to avoid reporting losses. The results ofthis study may be of use to researchers studying earnings management behavior and for standard setters with regard to establishing and monitoring standards.
format Article
author M. Yacob, Hasimah
Mastuki, Nor'azam
Md Noor, Rohaya
author_facet M. Yacob, Hasimah
Mastuki, Nor'azam
Md Noor, Rohaya
author_sort M. Yacob, Hasimah
title Deferred tax and earnings management under MASB 25 / Noor Hasimah M. Yacob, Nor'Azam Mastuki and Rohaya Md Noor
title_short Deferred tax and earnings management under MASB 25 / Noor Hasimah M. Yacob, Nor'Azam Mastuki and Rohaya Md Noor
title_full Deferred tax and earnings management under MASB 25 / Noor Hasimah M. Yacob, Nor'Azam Mastuki and Rohaya Md Noor
title_fullStr Deferred tax and earnings management under MASB 25 / Noor Hasimah M. Yacob, Nor'Azam Mastuki and Rohaya Md Noor
title_full_unstemmed Deferred tax and earnings management under MASB 25 / Noor Hasimah M. Yacob, Nor'Azam Mastuki and Rohaya Md Noor
title_sort deferred tax and earnings management under masb 25 / noor hasimah m. yacob, nor'azam mastuki and rohaya md noor
publisher Research Management Institute (RMI)
publishDate 2011
url http://ir.uitm.edu.my/id/eprint/13099/
http://ir.uitm.edu.my/id/eprint/13099/1/AJ_NOOR%20HASIMAH%20M.%20YACOB%20SMRJ%2011%201.pdf
first_indexed 2023-09-18T22:49:52Z
last_indexed 2023-09-18T22:49:52Z
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