Abstract
This paper uses a sample of 158 deferred tax adjustments resulting from the Omnibus Budget Reconciliation Act of 1993 (OBRA) to explore the magnitude and nature of analysts' and investors' functional fixation on reported accounting numbers. The 1993 OBRA, passed on August 10 of 1993, included a provision that raised the corporate tax rate from 34% to 35%. GAAP requires companies to adjust their deferred tax assets and liabilities to recognize the income effects of tax changes in the period of the tax change (SFAS No. 109 [1992]). In this case, the effects of the tax rate increase on deferred taxes would be included in the income tax expense component of 1993 third-quarter earnings.1
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
