Stock Market Valuation of Deferred Tax Assets: Evidence from Internet Firms

38 Pages Posted: 29 Nov 2004

See all articles by Mark P. Bauman

Mark P. Bauman

University of Northern Iowa

Somnath Das

University of Illinois at Chicago

Abstract

We use the provisions of SFAS No. 109, Accounting for Income Taxes, to examine the extent to which stock prices of Internet firms were associated with expectations of future profitability before versus after the 'market correction' in early 2000. We find that the valuation of deferred tax assets of firms with business models reliant on the level of web site traffic was significantly greater after the market correction. In our view, this evidence is consistent with pre-correction mispricing.

Suggested Citation

Bauman, Mark P. and Das, Somnath, Stock Market Valuation of Deferred Tax Assets: Evidence from Internet Firms. Available at SSRN: https://ssrn.com/abstract=618303

Mark P. Bauman (Contact Author)

University of Northern Iowa ( email )

Cedar Falls, IA 50614
United States
319-273-4323 (Phone)

Somnath Das

University of Illinois at Chicago ( email )

601 South Morgan Street
University Hall, Room 2303
Chicago, IL 60607
United States
312-996-4482 (Phone)
312-996-4520 (Fax)

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