Taxes and firm size

Zimmerman, Jerold L.

doi:10.1016/0165-4101(83)90008-3

Cited by 746 publications

(598 citation statements)

References 19 publications

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“…Several previous papers have indicated that a firm's total assets (TA) can be taken as a proxy for firm size (Berger and Ofek, 1995;Zhou, 2003;Zimmerman, 1983). Therefore, this paper uses two proxies, namely stock index returns for firm performance, and trade market value of total assets (TA) for firm size (see Section 3 for further details) to explore the size effects on volatility spillovers between exchange rates and tourism firm performance.…”

Section: Proxy Variables For Firm Size and Firm Performancementioning

confidence: 99%

Is small beautiful? Size effects of volatility spillovers for firm performance and exchange rates in tourism

Chang

Hsu

McAleer

2013

The North American Journal of Economics and Finance

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This paper examines the size effects of volatility spillovers for firm performance and exchange rates with asymmetry in the Taiwan tourism industry. The analysis is based on two conditional multivariate models, BEKK-AGARCH and VARMA-AGARCH, in the volatility specification. Daily data from 1 July 2008 to 29 June 2012 for 999 firms are used, which covers the Global Financial Crisis. The empirical findings indicate that there are size effects on volatility spillovers from the exchange rate to firm performance. Specifically, the risk for firm size has different effects from the three leading tourism sources to Taiwan, namely USA, Japan, and China. Furthermore, all the return series reveal quite high volatility spillovers (at over sixty percent) with a one-period lag. The empirical results show a negative correlation between exchange rate returns and stock returns. However, the asymmetric effect of the shock is ambiguous, owing to conflicts in the significance and signs of the asymmetry effect in the two estimated multivariate GARCH models. The empirical findings provide financial managers with a better understanding of how firm size is related to financial performance, risk and portfolio management strategies that can be used in practice.

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Section: Proxy Variables For Firm Size and Firm Performancementioning

confidence: 99%

Is small beautiful? Size effects of volatility spillovers for firm performance and exchange rates in tourism

Chang

Hsu

McAleer

2013

The North American Journal of Economics and Finance

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“…For example, Rego and Wilson (2008) While past studies exploited rm-speci c characteristics as proxies for rm-level opportunities and incentives (see Zimmerman 1983 andGupta andNewberry 1997) 6 , more recent studies have looked to agency costs, managerial incentives, and corporate governance to ex- 6 Zimmerman (1983) looks at the relation between rm size and rm-level ETRs (as a component of political costs) and nds evidence consistent with larger rms engaging in income-reducing accounting activities in order to mitigate the increased government scrutiny they incur over smaller rms. However, using the Tax Reform Act of 1987 (TRA), Gupta and Newberry (1997) nd con icting evidence that rm-level ETRs are not associated with rm size when looking across longer horizons.…”

Section: Empirical Predictionsmentioning

confidence: 99%

“…control for the increased incentives and opportunities that both pro table rms and rms with greater leverage (or complex nancing arrangements) have to avoid taxes. Size, the natural logarithm of assets, is a control for the in uence that rm size may exhibit upon the tax function and has been shown to be related to tax avoidance in Zimmerman (1983).…”

Section: Control Variablesmentioning

confidence: 99%

The Real Effects of Opacity: Evidence from Tax Avoidance

Kerr

2012

SSRN Journal

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The Real Effects of Opacity: Evidence from Tax Avoidance Jon N. KerrThis study provides evidence on a significant real consequence of an opaque financial reporting information environment: increased corporate tax avoidance. Using an international sample of firms, I find that firms with a more opaque information environment, as measured at both the firm and country level, exhibit higher levels of firm-specific tax avoidance. More importantly, additional tests using the adoption of International Financial Reporting Standards (IFRS) as an exogenous shock to the information environment while simultaneously controlling for tax regime changes around the date of IFRS adoption provide direct evidence on the direction of the association, namely that opacity causes tax avoidance. Similarly, the results from tests using the initial enforcement of insider trading laws provide additional support for a directional hypothesis. In support of the firm-level findings, I also find evidence in the aggregate that opacity is associated with countries collecting less corporate tax revenues as a percentage of gross domestic product. In whole, these findings suggest that tax avoidance is a significant real effect of opacity with implications for practitioners, regulators, researchers, and tax-enforcement agencies.

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“…Such an approach is likely to generate a large estimated discretionary accrual when a firm experiences extreme growth in the test period rather than the estimation period. Rather, to obtain a modified Jones model of discretionary accruals, we follow prior studies that estimate the model cross-sectionally and then subtract the change in accounts receivable from the change in sales (e.g., Subramanyam (1996); DeFond and Park (1997) Both Watts and Zimmerman (1978) and Zimmerman (1983) discuss political costs, which, together with the associated additional scrutiny of the firm's actions, increase the cost of earnings management. As a result, firms with higher political costs tend to manage earnings less.…”

Section: G Control Variables For Other Incentives To Manage Earningsmentioning

confidence: 99%

The Effect of Technical Default Cost on Discretionary Accounting Decisions

Hassabelnaby

Mosebach

et al. 2005

SSRN Journal

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This study investigates whether the variation in the expected costs of technical default leads managers to manipulate earnings in periods prior to, as well as in, the year in which avoidance of technical default becomes unlikely. We argue that managers have private information about the expected costs and consequences of default and, prior to default, condition their decisions about accounting choice and discretion on these expectations. We provide evidence on the endogeneity of two forms of discretion in accounting choices in the context of testing the debt covenant hypothesis. We document that both forms of earnings management are associated with a lower cost of technical default. Our findings also suggest earnings management is less likely when the expected cost of technical default is low, and such decisions are associated with a lower default cost for firms that actually enter technical default.

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Taxes and firm size

Cited by 746 publications

References 19 publications

Is small beautiful? Size effects of volatility spillovers for firm performance and exchange rates in tourism

Is small beautiful? Size effects of volatility spillovers for firm performance and exchange rates in tourism

The Real Effects of Opacity: Evidence from Tax Avoidance

The Effect of Technical Default Cost on Discretionary Accounting Decisions

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