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An analysis of lobbying behaviour ‐ The case of UK deferred taxation

An analysis of lobbying behaviour ‐ The case of UK deferred taxation This paper examines the lobbying behaviour of UK managers who commented on Accounting Standard Board proposals to re‐introduce full provision deferred taxation accounting. Although there were no direct cash‐flow implications associated with these proposals, they had the potential to affect a company’s reported net income and revenue reserves. Using published comments and financial statements data, the paper tests: (a) the conventional positive accounting theory gearing hypothesis, using debt/equity ratios and (b) a new dividend hypothesis that is presented in the paper. The findings did not provide support for the gearing hypothesis and are therefore consistent with recent work of various other authors. However, the new dividend hypothesis was supported and the paper therefore suggests that the potential impact that an accounting treatment has on the revenue reserves of a company, and thus its dividend paying capacity, is a plausible reason for observed lobbying behaviour in the UK. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Applied Accounting Research Emerald Publishing

An analysis of lobbying behaviour ‐ The case of UK deferred taxation

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Publisher
Emerald Publishing
Copyright
Copyright © 2006 Emerald Group Publishing Limited. All rights reserved.
ISSN
0967-5426
DOI
10.1108/96754260680001045
Publisher site
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Abstract

This paper examines the lobbying behaviour of UK managers who commented on Accounting Standard Board proposals to re‐introduce full provision deferred taxation accounting. Although there were no direct cash‐flow implications associated with these proposals, they had the potential to affect a company’s reported net income and revenue reserves. Using published comments and financial statements data, the paper tests: (a) the conventional positive accounting theory gearing hypothesis, using debt/equity ratios and (b) a new dividend hypothesis that is presented in the paper. The findings did not provide support for the gearing hypothesis and are therefore consistent with recent work of various other authors. However, the new dividend hypothesis was supported and the paper therefore suggests that the potential impact that an accounting treatment has on the revenue reserves of a company, and thus its dividend paying capacity, is a plausible reason for observed lobbying behaviour in the UK.

Journal

Journal of Applied Accounting Research – Emerald Publishing

Published: Mar 1, 2006

Keywords: Tax; Accounting theory; Lobbying

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