Journal article
The effect of shareholder scrutiny on corporate tax behavior: Evidence from shareholder tax litigation
Contemporary accounting research, Vol.41(1), pp.163-194
03/2024
DOI: 10.1111/1911-3846.12913
Abstract
Abstract This study examines the effect of shareholder scrutiny of corporate tax avoidance behavior and its related financial reporting. Specifically, we explore the factors associated with shareholder tax litigation and its effect on the future tax behavior of the sued firm and its peers. We find that sued firms have lower cash and GAAP effective tax rates (ETRs) and engage in extreme tax avoidance before litigation. After litigation, they decrease tax avoidance activities, relative to matched control firms. Peer firms in the same industry as sued firms similarly reduce their level of tax avoidance and the likelihood of extreme tax avoidance after the litigation, relative to control firms. Additional analyses suggest that sued firms change their tax avoidance behavior, rather than merely their tax financial reporting. Finally, the spillover results are strongest for peer firms with the most tax avoidance (i.e., the lowest cash ETRs) when the sued firm's alleged misconduct is revealed. This article is protected by copyright. All rights reserved.
Details
- Title: Subtitle
- The effect of shareholder scrutiny on corporate tax behavior: Evidence from shareholder tax litigation
- Creators
- Dain C. Donelson - University of IowaJennifer L. Glenn - The Ohio State UniversitySean T. McGuire - Texas A&M UniversityChristopher G. Yust - Texas A&M University
- Resource Type
- Journal article
- Publication Details
- Contemporary accounting research, Vol.41(1), pp.163-194
- DOI
- 10.1111/1911-3846.12913
- ISSN
- 0823-9150
- eISSN
- 1911-3846
- Language
- English
- Electronic publication date
- 10/20/2023
- Date published
- 03/2024
- Academic Unit
- Accounting; Law Faculty
- Record Identifier
- 9984500400602771
Metrics
12 Record Views