Latente Steuern und Earnings Management

On the one hand deferred income taxes can be used for earnings management for external reporting purposes by itself. On the other hand deferred income taxes can indicate earnings management in other accounting areas, fraud and aggressive tax management. Empirical research was able to identify the usefulness of information provided by sundry components of the reported income tax expense for users of financial statements. In particular, the German literature concerning financial statement analysis underestimates the value of this information. This paper critically reviews empirical research and draws conclusions for financial statement analysis and for future studies in this area.