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International Accounting
 

The impact of deferred taxes on the market value of Russian banks

Vol. 25, Iss. 9, SEPTEMBER 2022

Received: 19 May 2022

Received in revised form: 6 July 2022

Accepted: 18 July 2022

Available online: 15 September 2022

Subject Heading: Tax and taxation

JEL Classification: G21, H32, H39, M41

Pages: 1033–1070

https://doi.org/10.24891/ia.25.9.1033

Subject. This article attempts to identify the relationship between deferred taxes and the market reaction to the value of Russian banks. It is a continuation of previous studies to assess the relationship between deferred tax assets and the company value, and the applicability of the MTB and Ohlson Models as tools for assessing the relationship between market and accounting indicators.
Objectives. The article aims to explore the information significance of deferred taxes from the standpoint of their impact on the market value of Russian banks whose shares are listed on the Moscow Stock Exchange.
Methods. For the study, I used a statistical analysis and linear regression constructing.
Results. The article finds that deferred tax assets in the MTB Model are negatively related to the ratio of market and balance sheet valuation of capital, and in the Ohlson Model, they are positively related to the equity value ratio. Based on the analysis of the data obtained, the article reveals the shortcomings of the MTB and Ohlson Models when deferred taxes are included in them.
Conclusions and Relevance. Negative valuation of deferred tax assets in the MTB Model reduces the sustainability of profits. A positive assessment of deferred tax assets per share in the Ohlson Model suggests that the Russian capital market responds positively to such an object of accounting observation. The results of the study can be useful to a narrow group of specialists in bank management, financial analysts, scientists and practitioners in the field of accounting, taxation, and other interested parties who study the theoretical and financial aspects of deferred taxes.

Keywords: banks, book-tax differences, deferred taxation, market value, temporary differences

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