유효법인세율의 변화와 기업가치 관련성

Recent empirical research has documented how degree of income tax smoothing is affected by the change in earnings before taxes(Yoon et al., 2004). Furthermore, they have investigated the impact of the persistence of the change in earnings before taxes on income tax smoothing phenomenon. First, they observed that the degree of downward income tax smoothing when earnings before taxes increase is greater than that of upward income tax smoothing when earnings before taxes decrease. That is, the degree of income tax smoothing is shown to be asymmetrically affected by the increase/decrease in earnings before taxes. Second, they found that the degree of upward income tax smoothing continues to decline with a consecutive decrease in earnings before taxes. This result has indicated that financially distressed firms cannot continue to smooth income tax upwards, which involves continuous cash outflows. Third, they demonstrated that the degree of downward income tax smoothing remains the same with a consecutive increase in earnings before taxes. This result implies that firms are likely to keep smoothing their income taxes downwards. With increases in earnings before taxes over time, firms expect their probability of tax investigation by the tax authorities to be lowered. Therefore, they are likely to continue to smooth their income taxes downwards, which, in turn, maximize their profits. In contrast to Yoon et al.(2004), this study investigates the impact of asymmetrical degree of income tax payment adjustment on future earnings and firm value. Our empirical results are summarized as follows. First, the change in effective tax rate has a differential influence on future earnings when earnings before taxes increase or decrease respectively. The increase in effective tax rate when earnings before taxes increase is interpreted as a bad signal to future earnings. In contrast, the decrease in effective tax rate when earnings before taxes decrease is shown to be a good signal to future earnings. Second, the increase or decrease in effective interest rates is interpreted differently in the stock market. Namely, the increase in effective tax rate when earnings before taxes increase is regarded as increase in future earnings. The increase in effective tax rate when earnings before taxes decrease leads to a negative reaction in the stock market. Third, the stock market in the next period has the same reaction to the change in effective tax rate as in the previous period. This implies that the stock market's reaction to change in the contemporary period persists in the next period. The main contribution of this study is to analyze how the income tax payment adjustment hypothesis is related to firm's future earnings and the reaction of the stock market and test the usefulness of this income tax payment adjustment hypothesis. In practice, this study provides a formal evidence on how firms adjust the income tax payment when earnings before taxes increase or decrease respectively, which will possibly lead to better taxation decision on the part of Korean tax authorities. For instance, the fact that firms whose earnings before taxes keep increasing over time are likely to continue to smooth their income taxes downwards suggests that the tax authorities pay special attention to them. A caveat that must be recognized, however, stems from the limitation that this study imposes on our ability to consider other factors to assess their influence on our results. Specifically, this study is unable to take into account the change of income tax rules, tax rate changes, and the change of effective tax rates due to structural changes in income tax laws in our sample period. In addition, this study analyzes only financial data of companies listed in the Korean securities exchange.