The Shareholder Response to Corporate Tax Planning Advice Regulation

Donohoe, Michael P.; Gale, Brian; Mayberry, Michael

doi:10.2139/ssrn.3540996

Cited by 2 publications

(1 citation statement)

References 81 publications

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“…Consequently, tax risk captures fluctuations in tax payments due to tax positions claimed in one period but reversed later upon audit by tax authorities or government interventions (e.g., see Appendix C for the case of Forrest Labs) (Neuman, Omer, and Schmidt 2020). Concurrent literature also documsents that volatile tax payments are associated with equity investors' valuation and firm risk (Drake et al 2019;Donohoe, Gale, and Mayberry 2020). For my purposes, managers implement a tax planning strategy in the current year and market participants realize whether the strategy leads to volatile tax payments in subsequent periods as it leads to volatile future tax payments (see Figure 2).…”

Section: The Effect Of Tax Risk On the Association Between Iiq And Eiqmentioning

confidence: 95%

Does Tax Risk Attenuate the Positive Association between Internal and External Information Quality?

Oßwald¹

2020

Preprint

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This study examines whether tax risk attenuates the positive association between firms' internal information quality (IIQ) and external information quality (EIQ). Theoretically, higher IIQ allows managers to increase the quality of disclosures to external market participants, which improves EIQ. However, engaging in risky tax planning strategies discourages managers from disclosing information due to the risk of drawing attention from tax authorities (i.e., proprietary costs). I hypothesize and find that the association between IIQ and EIQ is fully attenuated for firms in the highest quintile of tax risk. A structural equation model and supplemental tests that account for business-related proprietary costs and uncertainty corroborate my findings. Overall, my results imply that firms with higher IIQ improve EIQ, on average. However, higher tax risk breaks down this link due to the proprietary costs of disclosing tax strategies to tax authorities.

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Section: The Effect Of Tax Risk On the Association Between Iiq And Eiqmentioning

confidence: 95%

Does Tax Risk Attenuate the Positive Association between Internal and External Information Quality?

Oßwald¹

2020

Preprint

View full text Add to dashboard Cite

show abstract

The Value of International Income-Shifting Opportunities to U.S. Multinational Firms

Demeré

Gramlich

2017

SSRN Journal

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The Shareholder Response to Corporate Tax Planning Advice Regulation

Cited by 2 publications

References 81 publications

Does Tax Risk Attenuate the Positive Association between Internal and External Information Quality?

Does Tax Risk Attenuate the Positive Association between Internal and External Information Quality?

The Value of International Income-Shifting Opportunities to U.S. Multinational Firms

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