Deferred tax assets of spanish listed companies: an empirical study

This study examines the factors that can determine the decision to activate prepaid tax mechanisms, also called deferred income assets. This decision affects company performance evaluation indicators such as net result, level of indebtedness or liquidity. Reported here is the first part of an empirical study, using a random sample of annual accounts of 124 companies listed on the Spanish stock exchange during the 1999-2001 period. The study will be continued with the analysis of the annual financial statements listed Spanish and Brazilian companies through the year 2009, permitting a comparative study. For each company and year the value of a variable measuring the weight that positive temporary differences have on accounting profit before taxes has been determined. Given the fact that necessary requirements for the application of a variance analysis ( ANOVA) were not met, diverse nonparametric tests were realized, specifically, the KrusKal-Wallis test of means and analysis of variance. Results obtained demonstrate that the levels of indebtedness, liquidity and yield are determining factors of the weight of positive temporary differences with respect to the accounting profit before taxes. It is concluded that high indebtedness and low liquidity increase the propensity to utilize prepaid taxes.