Zusammenfassung:
This study examines the recognition of deferred tax assets on tax loss carryforwards (TLCF-DTA) before and during the COVID-19 pandemic. We analyze a sample of large German firms from 2017-2021, hand-collecting deferred tax and management forecast data. The recognition behavior of the average sample firm seems not to change during the pandemic, but cross-sectional tests suggest firms with unfavorable or uncertain performance expectations reduce their TLCF-DTA recognition, which is consistent with recognition based on management forecasting. However, we find this behavior is asymmetric, since firms with optimistic expectations do not increase recognition simultaneously. Furthermore, firms seem not to follow usual earnings management patterns during the pandemic. Taken together, our results provide new insights into firms' response to an economic crisis for the highly relevant and ever-increasing accounting item TLCF-DTA.