This analysis demonstrates significant positive abnormal returns in equity prices due to new accounting standards for income taxes, suggesting financial implications.
Examines the equity price reaction to income increasing standards on accounting for income taxes, namely the Statements on Financial Accounting Standards (SFAS) No. 96 and No. 109. Hypothesis that significant positive abnormal returns should be observed around the Exposure Draft dates; Relation of equity price reaction to income effects and economic consequences.
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Espahbodi et al. (1995) studied this question.
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