Due to the proprietary nature of tax returns, the tax footnote is the primary source of information for stakeholders about a firm's tax position. However, studies suggest the tax authority acquires information in tax disclosures, creating a trade-off for managers on whether to provide decision-useful information for stakeholders or conceal information from the tax authority. We investigate this trade-off by examining the readability of tax footnotes. We find a positive association between tax avoidance and tax footnote readability for firms with tax avoidance below the industry-year median, consistent with managers highlighting good performance in the form of tax savings with straightforward disclosures. In contrast, we find a negative association between tax avoidance and tax footnote readability for firms with levels of tax avoidance above the industry-year median, consistent with managers concealing tax avoidance from the tax authority. Reinforcing these results, we find that investors place a premium (discount) on tax avoidance when the tax footnote is straightforward in firms with tax avoidance below (above) the industry-year median.

This paper examines the relative valuation of alternative methods of tax avoidance. Prior studies find that firm value is positively associated with overall measures of tax avoidance; I extend this research by providing evidence that investors distinguish between methods of tax reduction in their valuation of tax avoidance. The impact of tax avoidance on firm value is a function of tax risk, permanence of tax savings, tax planning costs, implicit taxes and contrasts in disclosures of tax reduction in the financial statements. My empirical results suggest that tax avoidance resulting from stock option tax benefits is positively associated with firm value, accelerated depreciation is not associated with firm value and deferral of residual tax on foreign earnings is negatively associated with firm value. Prior studies that find the positive association between firm value and tax avoidance is attenuated in poorly governed firms suggest the discount results from investor concern of managerial opportunism. Self-serving managers conceal diversion of tax savings from investors under the pretext that aggressive tax positions must be hidden from tax authorities in the financial statements. Under this theory transparent tax reduction methods that are clearly supported by the law should not be discounted by investors of poorly governed firms. However, I find that tax avoidance resulting from transparent stock option tax deductions is discounted in poorly governed firms, while tax avoidance derived from opaque deferral of the residual tax on foreign earnings is not, inconsistent with investors believing that managers are exploiting the compromised information environment associated with complex tax transactions.iii Dedication I dedicate this dissertation to my family. Matt, thanks for the support, sacrifice and understanding along the way. Marlowe, thanks for the perspective and smiles when I needed it most. Mom, Dad, Chris and Steve, thanks for the encouragement and support, both emotionally and financially.iv Acknowledgements First, I thank Dr. Bryan Cloyd, my dissertation chair, for his direction throughout the doctoral program. Thank you for your time and energy over the past four years to get me to this point. I appreciate that you always are able to help me see things in new ways, both from an academic and life standpoint. It was an honor to work with you.

This paper examines the relative valuation of alternative methods of tax avoidance. Prior studies find that firm value is positively associated with overall measures of tax avoidance; I extend this research by providing evidence that investors distinguish between methods of tax reduction in their valuation of tax avoidance. The impact of tax avoidance on firm value is a function of tax risk, permanence of tax savings, tax planning costs, implicit taxes and contrasts in disclosures of tax reduction in the financial statements. My empirical results suggest that tax avoidance resulting from stock option tax benefits is positively associated with firm value, accelerated depreciation is not associated with firm value and deferral of residual tax on foreign earnings is negatively associated with firm value. Prior studies that find the positive association between firm value and tax avoidance is attenuated in poorly governed firms suggest the discount results from investor concern of managerial opportunism. Self-serving managers conceal diversion of tax savings from investors under the pretext that aggressive tax positions must be hidden from tax authorities in the financial statements. Under this theory transparent tax reduction methods that are clearly supported by the law should not be discounted by investors of poorly governed firms. However, I find that tax avoidance resulting from transparent stock option tax deductions is discounted in poorly governed firms, while tax avoidance derived from opaque deferral of the residual tax on foreign earnings is not, inconsistent with investors believing that managers are exploiting the compromised information environment associated with complex tax transactions.iii Dedication I dedicate this dissertation to my family. Matt, thanks for the support, sacrifice and understanding along the way. Marlowe, thanks for the perspective and smiles when I needed it most. Mom, Dad, Chris and Steve, thanks for the encouragement and support, both emotionally and financially.iv Acknowledgements First, I thank Dr. Bryan Cloyd, my dissertation chair, for his direction throughout the doctoral program. Thank you for your time and energy over the past four years to get me to this point. I appreciate that you always are able to help me see things in new ways, both from an academic and life standpoint. It was an honor to work with you.

In this study, we examine the effects of tax avoidance and Corporate Social Responsibility (CSR) activities on equity market valuation. Economic theory suggests that managers should avoid taxes through any legal means (Friedman 1970), and that CSR activities are of value to the extent that shareholder wealth is maximized (Hales, Matsumura, Moser, and Payne 2016). We hypothesize that while equity market participants may positively value both CSR and tax avoidance, these two actions are viewed as inconsistent with one another when engaged upon contemporaneously, where increased activity of one diminishes the value of the other. Results, using a sample of U.S. public firms during years 2000–2013, support our expectation and show a negative interaction between CSR and tax avoidance. A series of robustness checks provide additional evidence consistent with investors viewing CSR and tax avoidance as contradictory. JEL Classifications: G32; M41; M49; M410. Data Availability: Data are available from the public sources cited in the text.

ChatGPT, a language-learning model chatbot, has garnered considerable attention for its ability to respond to users’ questions. Using data from 14 countries and 186 institutions, we compare ChatGPT and student performance for 28,085 questions from accounting assessments and textbook test banks. As of January 2023, ChatGPT provides correct answers for 56.5 percent of questions and partially correct answers for an additional 9.4 percent of questions. When considering point values for questions, students significantly outperform ChatGPT with a 76.7 percent average on assessments compared to 47.5 percent for ChatGPT if no partial credit is awarded and 56.5 percent if partial credit is awarded. Still, ChatGPT performs better than the student average for 15.8 percent of assessments when we include partial credit. We provide evidence of how ChatGPT performs on different question types, accounting topics, class levels, open/closed assessments, and test bank questions. We also discuss implications for accounting education and research.