Purpose

Prior studies document a positive relation between stock prices and tax-related contingent liability, unrecognized tax benefits (UTBs) and interpret the finding as evidence that investors reward tax aggressiveness. The purpose of this paper is to explore the nature of this puzzle finding by considering a link between UTBs and financial reporting strategy and propose that financial reporting conservatism may explain the positive association between UTBs and stock prices.

Design/methodology/approach

To estimate the incremental valuation weights on UTBs, the authors employ the Ohlson (1995) valuation model and regress stock prices on UTBs and its interactions with the proxies for financial reporting conservatism and tax aggressiveness. Further, the authors adopt a UTB estimation model to decompose its balance into the predicted and unpredicted components.

Findings

The authors find that the reporting conservatism has a positive effect on the market valuation of UTBs. The authors also find some evidence that tax aggressiveness increases the valuation weight of UTBs. When UTBs are decomposed into predicted and unpredicted components, the authors find that the effect of financial reporting conservatism is more pronounced for the market valuation of predicted UTBs. Collectively, the evidence suggests that conservative financial reporting is a major driver of the positive valuation of UTBs and that tax aggressiveness plays a less significant role in investors' valuation decisions.

Originality/value

While prior studies focus on how UTBs are associated with stock prices, this paper is the first attempt to explain why UTBs are positively valued by investors.

中文翻译：

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保守的财务报告和税收积极性对未确认税收优惠的市场价值的影响

目的

先前的研究记录了股价与与税收相关的或有负债，未确认的税收优惠（UTB）之间的正相关关系，并将该发现解释为投资者奖励税收积极性的证据。本文的目的是通过考虑UTB与财务报告策略之间的联系来探索这一难题的性质，并提出财务报告保守性可以解释UTB与股票价格之间的正相关关系。

设计/方法/方法

为了估计UTB的增量估值权重，作者采用了Ohlson（1995）的估值模型，对UTB的股票价格进行了回归，并对其与财务报告的保守性和税收积极性的代理之间的相互作用进行了回归。此外，作者采用UTB估计模型将其余额分解为预测和未预测的组成部分。

发现

作者发现，保守的报告对UTB的市场估值具有积极的影响。作者还发现一些证据表明，税收积极性增加了UTB的估值权重。当将UTB分解为预测和未预测的组成部分时，作者发现，财务报告保守性的影响对于预测的UTB的市场估值更为明显。总的来说，有证据表明，保守的财务报告是UTB积极估值的主要驱动力，而税收积极性在投资者的估值决策中作用较小。

创意/价值

尽管先前的研究着重于UTB与股票价格之间的关系，但本文还是首次尝试解释为何投资者对UTB给予积极的评价。