Subject category:
Finance, Accounting and Control
Published by:
Harvard Business Publishing
Version: 31 July 2012
Revision date: 3-Sep-2012
Length: 22 pages
Data source: Published sources
Topics:
Financial statements; Financial strategy; Accounting; Accounting methodologies; Accounting standards; Activity based budgeting; Capital; Capital-asset-pricing; Valuation; Cross functional management; Commercial banks; Tax accounting; Taxation; Conflicts of interest; Bribery; Financial accounting; Disclosure
Abstract
The case details the conflict between Mike Mayo, an influential banking analyst and Citigroup about what Mayo considers aggressive accounting policies. Mike Mayo questions Citigroup's lack of a valuation allowance against their Deferred Tax Assets despite Citi's recent loss. The case discusses the economics and accounting for deferred tax assets. It also focuses on management - analyst relations and challenges faced by analysts in providing bad news on companies. The inclusion of deferred tax assets in Tier 1 capital and implications for regulatory capital are also discussed.
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Abstract
The case details the conflict between Mike Mayo, an influential banking analyst and Citigroup about what Mayo considers aggressive accounting policies. Mike Mayo questions Citigroup's lack of a valuation allowance against their Deferred Tax Assets despite Citi's recent loss. The case discusses the economics and accounting for deferred tax assets. It also focuses on management - analyst relations and challenges faced by analysts in providing bad news on companies. The inclusion of deferred tax assets in Tier 1 capital and implications for regulatory capital are also discussed.