Journal article
Conforming Tax Avoidance and Capital Market Pressure
The Accounting review, Vol.94(6), pp.1-30
11/01/2019
DOI: 10.2308/accr-52359
Abstract
In this study, we develop a measure of corporate tax avoidance that reduces both financial and taxable income, which we refer to as "book-tax conforming" tax avoidance. We use simulation analyses, LIFO/FIFO inventory method conversions, and samples of private and public firms to validate our measure. We then investigate the prevalence of conforming tax avoidance within a sample of public firms. Results from the validation tests indicate that our measure of conforming tax avoidance successfully captures book-tax conforming transactions. Consistent with expectations, we also find that the extent to which public firms engage in conforming tax avoidance varies systematically with the capital market pressures. Our study develops a new measure of conforming tax avoidance that should be useful in future research and provides new insights on the extent to which public firms are willing to reduce income tax liabilities at the expense of reporting lower financial income.
Details
- Title: Subtitle
- Conforming Tax Avoidance and Capital Market Pressure
- Creators
- Brad A. Badertscher - University of Notre DameSharon P. Katz - INSEADSonja Olhoft Rego - Indiana UniversityRyan J. Wilson - University of Oregon
- Resource Type
- Journal article
- Publication Details
- The Accounting review, Vol.94(6), pp.1-30
- Publisher
- Amer Accounting Assoc
- DOI
- 10.2308/accr-52359
- ISSN
- 0001-4826
- eISSN
- 1558-7967
- Number of pages
- 30
- Grant note
- Sam Frumer Professorship Indiana University Kelley School of Business
- Language
- English
- Date published
- 11/01/2019
- Academic Unit
- Accounting
- Record Identifier
- 9984380426102771
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