应纳税所得额以及分析【外文翻译】.doc

外文翻译原文Taxable income and analysisMaterial Source:CA Magazine Author: Suzanne Landry and Nadi ChlalaIt can be a useful element to assess the quality of earnings reported by listed entitiesThe financial scandals of the past few years have underscored how important it is for investors to consider the quality of earnings reported by listed entities. Despite the existence of many benchmarks, the financial market seemed unable to foresee these events. Recently, an attempt was made to assess earnings quality by connecting the dots between pre-tax income (accounting income) and taxable income, the argument being it would be unusual for a company to report high net earnings while showing little or no tax liability. The Enron case was cited as an example because between 1996 and 1999 the company had no taxable income, even though it reported accounting income of US$2.3 billion in the same period. Similarly, the WorldCom affair was evoked, where Andersen was blamed for failing to question the gap between accounting income and taxable income.There are a number of useful factors to consider if taxable income is to be used as a benchmark to assess the quality of reported earnings, and the appropriateness of such a benchmark and its limitations need to be examined.Earnings quality assessment factorsInvestors use different benchmarks to analyze an enterprise’s earnings. The purpose of these benchmarks is to verify two specific characteristics of reported earnings. The first concerns the relevance of earnings to decision-making. The more net earnings reflect the enterprise’s economic performance, the more they are perceived as being of good quality and the more financial statement users will be able to rely on them for decision-making.The second characteristic is the absence of management bias. Net earnings are compared to other figures that require fewer estimates and are thus less likely to be biased, such as cash flow from operations. The more net earnings are consistent with cash flow from operations, the more they are deemed to be of good quality. In addition, since management tends to want to increase net earnings, the fact it adopted conservative accounting practices is an indicator of its lack of bias.Taxable income as benchmark to assess earnings qualityTaxable income could be a valid benchmark, especially as concerns the second characteristic. Management’s judgment and fair value measurement have recently played a major role in determining net earnings, thus increasing the risk of biased information. There are three main advantages to using taxable income as a benchmark. First, taxable income is less subject to falsification than cash flow from operations, which is directly affected by transfers of receivables, accelerated accounts receivable collection, and delays in the settlement of payables. In addition, the taxable income figure reflects management’s optimism because it is lower than accounting income. Management hesitates to artificially inflate taxable income, unlike earnings and cash flow. Finally, the measurement of taxable income is not as flexible as for accounting income. As a result, taxable income is less likely to be manipulated by management and an unusual gap between accounting and taxable income may indicate financial statement manipulation or aggressive tax behaviour.In the US increasing divergence between accounting income and taxable income in the last few years raises the following question: are enterprises manipulating the financial statements or are they using aggressive financial planning methods, or both? Studies suggest taxable income provides information on earnings quality because US tax law limits the deduct-ibility of certain expenditures such as warranty provisions and restructuring costs, which are generally the vehicle for earnings manipulation. First Baruch Lev and Doron Nissim suggest using taxable income as a reference to ensure the reality and consistency of accounting income. According to them and Michelle Hanlon, financial statement or income tax return manipulation can be detected by analyzing the relationship between taxable income and accounting income.The significant gaps between accounting and taxable income also lead to questions from tax authorities (Lillian Mills, 1998; US Treasury Department, 1999) and the general public (Gil Manzon, 1992), which can also increase capital cost. For example, a material difference between accounting and taxable income may indicate to investors that the accounting income is not enduring or persistent over the long term and, consequently, of inferior quality.Management may also want to reduce the gap between accounting income and taxable income. US researchers have noted that management does this to justify aggressive tax behaviour by adopting an accounting policy that will depress accounting income (Bryan Cloyd et al., 1996) or to minimize the risk that aggressive accounting practices will be discover。