The Accuracy and Adequacy of Tax Data in COMPUSTAT.
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The accuracy of the amounts reported by Standard & Poor's Compustat Services, Inc. (COMPUSTAT) in 19 tax fields is examined. The error rate varies widely, although it is generally higher for items reported in the footnotes than for items reported on the income statement or balance sheet. The error rates are higher for utilities and when special items are reported on the income statement below income from continuing operations. These special items include the use of an NOL carryforward, discontinued operations, cumulative adjustments, and extraordinary items. In addition to errors, researchers should be aware of COMPUSTAT's coding policies. Under some circumstances (as discussed in the paper), a field may indicate an amount is missing when an amount is reported in the financial statements. This is particularly true for the breakdown of current and deferred taxes into federal, state, and foreign components. The usefulness of the NOL carryforward field is also limited by COMPUSTAT's coding policies and errors. [ABSTRACT FROM AUTHOR]
author list (cited authors)
Kinney, M. R., & Swanson, E. P.