Influence of countries’ tax enforcement on the relationship between tax expenditure surprise and the accuracy of financial analysts’ earnings forecasts
DOI:
https://doi.org/10.17524/repec.v19.e3675Palavras-chave:
Analistas Financeiros, Previsão de Lucros, Surpresa na Despesa Fiscal, Enforcement FiscalResumo
Objective: To examine the influence of countries’ tax enforcement on the relationship between tax expense
surprise and the accuracy of financial analysts’ earnings forecasts. Method: Data from a sample of 4,775
companies across 35 countries from 2001 to 2019 were analyzed using descriptive statistics, correlation
analysis, and Ordinary Least Squares (OLS) regression tests.
Results: Financial analysts systematically issue optimistic earnings forecasts, and tax expense surprise
is incrementally relevant to earnings surprise in explaining analysts’ future errors. These information
intermediaries do not efficiently incorporate tax information when issuing their earnings expectations. The
findings indicate that analysts use tax information more effectively and improve the accuracy of earnings
forecasts in environments with high levels of tax enforcement. However, the results were insignificant
when U.S. companies were excluded from the sample.
Contribution: These findings underscore the importance of tax enforcement and tax information in
shaping financial analysts’ expectations about future performance, contributing to greater efficiency in
the capital market.
Tradução
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