CPE SESSION 8 - Wednesday, 8:00 AM - 11:00 AM

Empirical Tax Research in Accounting
and Recent Earnings Based Valuation Research

Description/Objectives:
Empirical Tax Research in Accounting (Douglas Shackelford)
This session will trace the development of archival, microeconomic-based, empirical income tax research in accounting over the last fifteen years. The session will address three major areas of research: (1) the coordination of tax and nontax factors, (2) the effects of taxes on asset prices, and (3) the taxation of multijurisdictional (international and interstate) commerce. It will draw heavily from Shackelford and Shevlin (Journal of Accounting and Economics 2001) and comments at the 2002 Doctoral Consortium.

Recent Earnings Based Valuation Research (Peter Easton)
This session will review the recent research that is based (1) on the residual income valuation model and (2) on a more recent model (Ohlson-Juettner Naroth) that focuses on earnings and earnings growth. This literature has addressed two main issues (1) the effectiveness of equity valuation based on forecasts of earnings, and (2) the use of accounting forecasts in the estimation of implicit prices, cost of capital, and growth. Most of the session will be devoted to estimating the cost of capital using forecasts of earnings and observed prices. I will also briefly discuss the use of earnings-based valuation models as the framework for teaching financial statement analysis.

Format/Structure:
Lecture.

Intended Audience:
Those who would like to learn about developments in empirical tax research over the last 15 years; and those interested in earnings based valuation.

Presenters:
Douglas A. Shackelford, The University of North Carolina at Chapel Hill
Peter Easton, The Ohio State University

Sponsor:
Vice President-Research