IDEAS home Printed from https://ideas.repec.org/a/bla/acctfi/v56y2016i1p217-250.html
   My bibliography  Save this article

Unrealized earnings, dividends and reporting aggressiveness: an examination of firms’ behavior in the era of fair value accounting

Author

Listed:
  • Steven Cahan
  • Ester Chen
  • Ilanit Gavious
  • Steven Cahan

Abstract

type="main" xml:id="acfi12187-abs-0001"> This study explores changes in the dividend policy of companies following the adoption of fair value accounting rules. Using a sample of Israeli firms that adopted International Financial Reporting Standards (IFRS), we document a dramatic increase in the payout ratios of firms that distributed dividends based on revaluation gains from 32 percent of realized earnings in the pre-IFRS period to 115 percent in the post-IFRS period. Furthermore, we reveal that firms paying dividends from unrealized earnings are more aggressive both in their book and tax reporting behaviors. We demonstrate that this increased aggressiveness is associated with the payment of cash dividends from paper profits.

Suggested Citation

  • Steven Cahan & Ester Chen & Ilanit Gavious & Steven Cahan, 2016. "Unrealized earnings, dividends and reporting aggressiveness: an examination of firms’ behavior in the era of fair value accounting," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 56(1), pages 217-250, March.
  • Handle: RePEc:bla:acctfi:v:56:y:2016:i:1:p:217-250
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/acfi.2016.56.issue-1
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xiaomeng Chen & Andreas Hellmann & Safdar R. Mithani, 2020. "The Effect of Fair Value Adjustments on Dividend Policy Under Mandatory International Financial Reporting Standards Adoption: Australian Evidence," Abacus, Accounting Foundation, University of Sydney, vol. 56(3), pages 436-453, September.
    2. Liyu He & Sue Wright & Elaine Evans, 2021. "The impact of managerial discretion on fair value information in the Australian agricultural sector," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(S1), pages 1897-1930, April.
    3. Ester Chen & Ilanit Gavious & Nadav Steinberg, 2019. "Dividends from unrealized earnings and default risk," Review of Accounting Studies, Springer, vol. 24(2), pages 491-535, June.
    4. Marhaendra Kusuma & Diana Zuhroh & Prihat Assih & Grahita Chandrarin, 2021. "The Effect of Net Income and Other Comprehensive Income on Future¡¯s Comprehensive Income With Attribution of Comprehensive Income as Moderating Variable," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 12(3), pages 205-219, May.
    5. Stewart Jones & Nurul Alam, 2019. "A machine learning analysis of citation impact among selected Pacific Basin journals," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 59(4), pages 2509-2552, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:acctfi:v:56:y:2016:i:1:p:217-250. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: https://edirc.repec.org/data/aaanzea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.