Template-Type: ReDIF-Article 1.0 Author-Name: Chelsea Schrader Author-Name: Chiulien Venezia Title: THE RELATIONSHIP BETWEEN TAX RISK AND ACQUISITION PRICE PREMIUM Abstract: The objective of this study is to evaluate the extent to which financial-statement based proxies for tax risk (i.e. tax reserves) are associated with purchase price in the context of acquisitions. More specifically, we look at the target’s tax risk (tax positions that increase the uncertainty of future outcomes) in relation to the acquisition premium paid by the acquirer. Consistent with other studies, we utilize the level of a firm’s tax reserves (as reported under FIN 48) as the measure that best captures tax risk. The results display that tax risk has a negative and statistically significant relationship with acquisition premium, suggesting that the bidders pays a lower premium when the target firm has tax reserves on their balance sheet. The result is consistent with the argument that aggressive tax behavior by a target may create a significant liability to the acquirer after the takeover. From these results, we insinuate that the acquirer incorporates tax risk into the merger and acquisition terms Classification-JEL: M400, M490 Keywords: Tax Risk, Acquisition Price Premium, Proxy for Tax Risk Journal: Accounting & Taxation Pages: 1-10 Volume: 11 Issue: 1 Year: 2019 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v11n1-2019/AT-V11N1-2019-1.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:11:y:2019:i:1:p:1-10 Template-Type: ReDIF-Article 1.0 Author-Name: Sherry Fang Li Title: CAPITAL MARKET CONSEQUENCES OF EXPECTATIONS MANAGEMENT IN THE POSTREGULATION FAIR DISCLOSURE PERIOD Abstract: This paper investigates the capital market consequences of expectations management in the postRegulation Fair Disclosure period. Results show that investors punish firms that deliberately issue pessimistic public guidance to dampen analysts’ expectations to a beatable level in the post-Regulation Fair Disclosure Era. I find that on average, the negative stock price effects caused by management’s pessimistic guidance dominate the positive stock price effects associated with the positive earnings surprises. Furthermore, both the short-term stock return over the combined guidance plus earnings announcement window and the long-term total period return are more negative for guidance firms than for firms that do not guide and thus miss financial analysts’ expectations Classification-JEL: M41, M48 Keywords: Expectations Management, Earnings Guidance, Managerial Guidance, Regulation Fair Disclosure, Analysts’ Expectations, Capital Market Journal: Accounting & Taxation Pages: 11-20 Volume: 11 Issue: 1 Year: 2019 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v11n1-2019/AT-V11N1-2019-2.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:11:y:2019:i:1:p:11-20 Template-Type: ReDIF-Article 1.0 Author-Name: Deanna Burgess Author-Name: Adrian Valencia Author-Name: Ara Volkan Title: ACCOUNTING FOR CONVERTIBLE BONDS: CURRENT PRACTICES AND PROPOSED CHANGES Abstract: Convertible bonds are financial instruments used by corporations to raise funds. Investors buy them for both their return and potential equity feature. To make the bonds more attractive to investors and to lower the bond interest rate, the corporations give investors the opportunity to receive equity shares at a time of their choosing during the life of the bonds. According to the generally accepted accounting standards issued by the Financial Accounting Standards Board, convertible bonds in the U.S. are accounted for as bonds, ignoring the equity option imbedded in these instruments. In the rest of the world, convertible bonds are accounted for according to the international financial reporting standards of the International Accounting Standards Board. Under international financial reporting standards, convertible bonds are bifurcated into liability and equity components. Should the U.S. standards change? Will such a change result in financial statements that are more transparent and representationally faithful? This paper aims to answer these questions and propose recognition, measurement, and reporting procedures that will implement the answers Classification-JEL: M41, M48 Keywords: Convertible Bonds, GAAP, IFRS, IASB, FASB Journal: Accounting & Taxation Pages: 21-34 Volume: 11 Issue: 1 Year: 2019 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v11n1-2019/AT-V11N1-2019-3.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:11:y:2019:i:1:p:21-34 Template-Type: ReDIF-Article 1.0 Author-Name: Xiaoxiao Song Title: EFFECTS OF ANALYSTS’ COUNTRY FAMILIARITY ON FORECAST BEHAVIOR: EVIDENCE FROM CHINESE CROSS-LISTED FIRMS IN THE UNITED STATES Abstract: This study provides empirical evidence regarding the effect of analysts’ country familiarity on their forecast behavior. Prior research has generally agreed that local analysts outperform their nonlocal counterparts due to information advantage or local familiarity. However, the effect of country familiarity on analysts’ earnings forecast abilities for foreign firms cross-listed in the United States is unclear. Using a handcollected sample of Chinese cross-listed firms, I examine whether analysts who are familiar with these Chinese firms are associated with better performance in forecast accuracy, forecast dispersion, and information precision. Results indicate that country familiarity has a positive effect on analysts’ earnings forecasts. Specifically, analysts who are familiar with Chinese cross-listed firms have higher accuracy and lower dispersion. Additional analysis suggests that the superior performance can be attributed to analysts’ private information precision rather than public information precision Classification-JEL: F23, F37 Keywords: Analyst Forecast Behavior, Local Analyst Advantage, Country Familiarity Journal: Accounting & Taxation Pages: 35-46 Volume: 11 Issue: 1 Year: 2019 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v11n1-2019/AT-V11N1-2019-4.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:11:y:2019:i:1:p:35-46 Template-Type: ReDIF-Article 1.0 Author-Name: Robert J. Walsh Title: AN HISTORY OF US TAX CODE COMPLEXITY WITHIN COMPUTER-BASED RETURN PREPARATION Abstract: The current income tax system in the United States is extraordinarily complex. Efforts like the tax law changes in 2017 have done little to lessen the overall compliance burden. There are a variety of reasons for this, some intentional and some accidental. This paper examines one of the accidental reasons for the history of growing computer technology over the past 50 years and its effects on increasing tax complexity in the US. A black box phenomenon of tax preparation that exists today has grown from an inconspicuous start by merely desiring arithmetic on the tax forms to be accurate. Decades later, it is easy to conclude that absent this enormous growth in computer technology, US lawmakers could not possibly have passed and continue to pass laws into such a convoluted tax system. Whether it is optimal for a tax system to be so disguised from the taxpayer is debatable, particularly with other parties, like the Internal Revenue Service and tax preparation companies like Intuit having so much now invested in this electronic process. Classification-JEL: M41, M42, M48 Keywords: Computer, Tax Preparation, Tax Complexity Journal: Accounting & Taxation Pages: 47-57 Volume: 11 Issue: 1 Year: 2019 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v11n1-2019/AT-V11N1-2019-5.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:11:y:2019:i:1:p:47-57 Template-Type: ReDIF-Article 1.0 Author-Name: Lou X. Orchard Author-Name: Jeffrey L. Decker Author-Name: Tim G. Kizirian Title: AN INTERNAL CONTROL EVALUATION TOOL FOR PROPERTY EXPENDITURES Abstract: This paper presents a previously unpublished tool for conducting the initial assessment of internal control objectives and activities for the expenditures cycle of companies with income-producing properties. Variations of this tool are used by Certified Public Accounting firms in their independent audits of such companies. We discuss the tool’s potential usefulness to both independent auditors and executives of such companies, as well as the tool’s place within the existing literature on internal control. How the quality of the tool could be assessed is also discussed Classification-JEL: M42, M41, M10 Keywords:Internal Control, Expenditures, Income Producing Properties Journal: Accounting & Taxation Pages: 59-70 Volume: 11 Issue: 1 Year: 2019 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v11n1-2019/AT-V11N1-2019-6.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:11:y:2019:i:1:p:59-70 Template-Type: ReDIF-Article 1.0 Author-Name: Jose Asuncion Corona Duenas Author-Name: Cesar Corona Pacheco Title: IMPACTS OF FISCAL REFORM ON DIVIDENDS: EVIDENCE FROM MEXICO Abstract: This paper addresses the Mexican 2014 Tax Reform. Specifically, we examine the distribution of dividends made by thirty-five companies that make up the Price and Quotation Index of the Mexican Stock Exchange. We also examine shareholders who receive the dividends. Results show that companies refrained from declaring dividends in 2014 and payments normalized in 2015. Since 2015, as a result of the 2014 Tax Reform, which required shareholders who receive dividends to pay an extra tax of 10%, dividends have become les desirable. Companies have accumulated profits destined for reinvestment in the company Classification-JEL: G31, G38 Keywords: Dividend Policy, Residual Theory, Tax Reform Journal: Accounting & Taxation Pages: 71-81 Volume: 11 Issue: 1 Year: 2019 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v11n1-2019/AT-V11N1-2019-7.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:11:y:2019:i:1:p:71-81 Template-Type: ReDIF-Article 1.0 Author-Name: Lara Sofia Romero Author-Name: Rafael Romero Author-Name: Sim Jonathan Covington Title: PAYDAY LENDING REGULATIONS AND THE IMPACT ON WOMEN OF COLOR Abstract: Payday loans, or small short-term loans that carry high fees, may provide a much-needed safety net for some consumers in need of quick cash for emergencies. However, data suggest that most payday loan borrowers become repeat users caught in a cycle of high-cost debt. Furthermore, empirical evidence suggests consistent overrepresentation of women of color, including many single mothers, among payday loan borrowers. Based on international human rights law, the U.S. has an obligation to remedy predatory economic practices such as a payday lending that have a disproportionately negative economic effect on women of color. Posing the issue of payday lending as a human rights issue can make an important contribution to public action on how to address the aftermath of the financial crisis and its impact on women of color Classification-JEL: K1, K4 Keywords: Payday Loans, Women of Color, Human Rights Journal: Accounting & Taxation Pages: 83-92 Volume: 11 Issue: 1 Year: 2019 File-URL: http://www.theibfr2.com/RePEc/ibf/acttax/at-v11n1-2019/AT-V11N1-2019-8.pdf File-Format: Application/pdf Handle: RePEc:ibf:acttax:v:11:y:2019:i:1:p:83-92