{"title":"Do Consumer-Directed Tax Credits Effectively Increase Demand? Experimental Evidence of Conditional Success","authors":"Donna D. Bobek","doi":"10.2308/ATAX-51996","DOIUrl":"https://doi.org/10.2308/ATAX-51996","url":null,"abstract":"","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":null,"pages":null},"PeriodicalIF":1.6,"publicationDate":"2018-01-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68958300","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT: This study investigates the effects of the Internal Revenue Service requiring confidential Schedule UTP disclosures on corporate tax planning over the period from 2008 to 2013. We make th...
{"title":"Does Schedule UTP Have Uniform Long-Run Effects on Corporate Tax Planning?","authors":"K. Honaker, D. Sharma","doi":"10.2308/ATAX-51800","DOIUrl":"https://doi.org/10.2308/ATAX-51800","url":null,"abstract":"ABSTRACT: This study investigates the effects of the Internal Revenue Service requiring confidential Schedule UTP disclosures on corporate tax planning over the period from 2008 to 2013. We make th...","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":null,"pages":null},"PeriodicalIF":1.6,"publicationDate":"2017-10-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42917764","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT: Much empirical evidence is consistent with properly incentivized executives engaging in more tax avoidance. However, other studies provide evidence consistent with tax avoidance facilitat...
{"title":"Equity Compensation and Tax Avoidance: Disentangling Managerial Incentives from Tax Benefits and Reexamining the Effect of Shareholder Rights","authors":"Jeri K. Seidman, Bridget Stomberg","doi":"10.2308/ATAX-51755","DOIUrl":"https://doi.org/10.2308/ATAX-51755","url":null,"abstract":"ABSTRACT: Much empirical evidence is consistent with properly incentivized executives engaging in more tax avoidance. However, other studies provide evidence consistent with tax avoidance facilitat...","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":null,"pages":null},"PeriodicalIF":1.6,"publicationDate":"2017-10-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"45587326","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT: We examine the market valuation of the annual change in the additional paid-in capital (APIC) tax pool, a financial statement account that captures the permanent book-to-tax differences related to stock-based compensation awards. Evidence from prior compensation studies demonstrates that the tax deduction from the settlement of stock-based awards, rather than the recorded book expense, is the true economic cost of the awards. If this is true, then the APIC tax pool should be negatively related to firm value. Conversely, previous tax avoidance research suggests that this method of tax avoidance should be positively associated with firm value since it reduces cash tax payments. Using hand-collected data, we document a negative relation between the change in the APIC tax pool and cumulative abnormal returns surrounding the 10-K filing date. This result is consistent with the notion that investors use a tax-related financial statement account (i.e., the APIC tax pool) to incorporate the true economi...
{"title":"The Market Valuation of the Permanent Book-to-Tax Differences Generated by Stock-Based Compensation Awards","authors":"James D. Brushwood, Derek Johnston, L. Kutcher","doi":"10.2308/ATAX-51791","DOIUrl":"https://doi.org/10.2308/ATAX-51791","url":null,"abstract":"ABSTRACT: We examine the market valuation of the annual change in the additional paid-in capital (APIC) tax pool, a financial statement account that captures the permanent book-to-tax differences related to stock-based compensation awards. Evidence from prior compensation studies demonstrates that the tax deduction from the settlement of stock-based awards, rather than the recorded book expense, is the true economic cost of the awards. If this is true, then the APIC tax pool should be negatively related to firm value. Conversely, previous tax avoidance research suggests that this method of tax avoidance should be positively associated with firm value since it reduces cash tax payments. Using hand-collected data, we document a negative relation between the change in the APIC tax pool and cumulative abnormal returns surrounding the 10-K filing date. This result is consistent with the notion that investors use a tax-related financial statement account (i.e., the APIC tax pool) to incorporate the true economi...","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":null,"pages":null},"PeriodicalIF":1.6,"publicationDate":"2017-10-06","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"42603577","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Annual Editor Report","authors":"C. Weaver","doi":"10.2308/ATAX-10599","DOIUrl":"https://doi.org/10.2308/ATAX-10599","url":null,"abstract":"","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":null,"pages":null},"PeriodicalIF":1.6,"publicationDate":"2017-09-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2308/ATAX-10599","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"48945854","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT: We investigate the consequences of tax-related internal control material weaknesses (ICMWs) for financial reporting. We hypothesize that the presence of ineffective controls over the tax function makes earnings management through the income tax accrual (both income increasing and income decreasing) easier to implement relative to firms with effective controls. We also predict that the remediation of tax-related ICMWs has the effect of constraining earnings management through the tax accrual. The results provide support for our predictions. We also find that last chance earnings management via tax-related ICMWs is concentrated in the early years of our sample, during the initial SOX implementation period. Our results suggest that tax-related ICMWs were initially associated with greater tax-expense management but that SOX internal control assessments subsequently improved the quality of financial reporting by reducing opportunities for tax-expense management.
{"title":"Material Weaknesses in Tax-Related Internal Controls and Last Chance Earnings Management","authors":"Cristi A. Gleason, Morton Pincus, S. Rego","doi":"10.2308/ATAX-51511","DOIUrl":"https://doi.org/10.2308/ATAX-51511","url":null,"abstract":"ABSTRACT: We investigate the consequences of tax-related internal control material weaknesses (ICMWs) for financial reporting. We hypothesize that the presence of ineffective controls over the tax function makes earnings management through the income tax accrual (both income increasing and income decreasing) easier to implement relative to firms with effective controls. We also predict that the remediation of tax-related ICMWs has the effect of constraining earnings management through the tax accrual. The results provide support for our predictions. We also find that last chance earnings management via tax-related ICMWs is concentrated in the early years of our sample, during the initial SOX implementation period. Our results suggest that tax-related ICMWs were initially associated with greater tax-expense management but that SOX internal control assessments subsequently improved the quality of financial reporting by reducing opportunities for tax-expense management.","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":null,"pages":null},"PeriodicalIF":1.6,"publicationDate":"2017-03-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"41705337","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Income Statement Reporting Discretion Allowed by FIN 48: Interest and Penalty Expense Classification","authors":"John L. Abernathy, Brooke D. Beyer, Andrew D. Gross, Eric T. Rapley","doi":"10.2308/ATAX-51542","DOIUrl":"https://doi.org/10.2308/ATAX-51542","url":null,"abstract":"ABSTRACT: Financial Accounting Standards Board Interpretation No. 48 (FIN 48, FASB 2006) allows discretion regarding the income statement classification of interest and penalty expenses for unrecog...","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":null,"pages":null},"PeriodicalIF":1.6,"publicationDate":"2017-03-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"47550465","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT: We expect firms with the greatest exposure to reputational damage among consumers will engage in lower levels of tax avoidance to minimize unwanted scrutiny that could impair the firms' reputation. We identify a set of firms with valuable consumer reputation using Harris Interactive's EquiTrend survey, which surveys consumers about their perceptions of valuable and prominent brands. We find evidence in support of our hypothesis that firms with valuable brands will engage in less tax avoidance. Specifically, we find a positive and significant association between our measure of reputation and both the GAAP and cash effective tax rates (measured over one and three years). We find mixed evidence on whether there is a negative and significant association between reputation and the probability the firm is engaging in tax sheltering.
{"title":"An Examination of Reputational Costs and Tax Avoidance: Evidence from Firms with Valuable Consumer Brands","authors":"Chelsea Rae Austin, R. Wilson","doi":"10.2308/ATAX-51634","DOIUrl":"https://doi.org/10.2308/ATAX-51634","url":null,"abstract":"ABSTRACT: We expect firms with the greatest exposure to reputational damage among consumers will engage in lower levels of tax avoidance to minimize unwanted scrutiny that could impair the firms' reputation. We identify a set of firms with valuable consumer reputation using Harris Interactive's EquiTrend survey, which surveys consumers about their perceptions of valuable and prominent brands. We find evidence in support of our hypothesis that firms with valuable brands will engage in less tax avoidance. Specifically, we find a positive and significant association between our measure of reputation and both the GAAP and cash effective tax rates (measured over one and three years). We find mixed evidence on whether there is a negative and significant association between reputation and the probability the firm is engaging in tax sheltering.","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":null,"pages":null},"PeriodicalIF":1.6,"publicationDate":"2017-03-08","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"44006736","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
ABSTRACT Effective for fiscal years beginning after December 15, 2006, FIN 48 significantly altered uncertain tax benefit (UTB) recognition and disclosure requirements relative to its predecessor standard, FAS 5. We examine the effect of the new standard on audit pricing. We first document that UTB-related audit fees increased following the implementation of FIN 48. However, we also find that this increase is primarily driven by a spike in the audit pricing of UTBs in 2007. Indeed, we find that the audit pricing of UTBs in the 2008–2012 period is not significantly different from that of the 2002–2006 period. We interpret these results to indicate that although firms incurred significant FIN 48 implementation costs, the ongoing audit pricing of UTBs under FIN 48 is similar to that of FAS 5. Our findings suggest that any potential benefits of FIN 48 may outweigh associated costs related to a temporary increase in audit fees. JEL Classifications: H25; M40; M41; M42; M48.
{"title":"The Cost of Compliance: FIN 48 and Audit Fees","authors":"M. Erickson, N. Goldman, James Stekelberg","doi":"10.2308/ATAX-51323","DOIUrl":"https://doi.org/10.2308/ATAX-51323","url":null,"abstract":"ABSTRACT Effective for fiscal years beginning after December 15, 2006, FIN 48 significantly altered uncertain tax benefit (UTB) recognition and disclosure requirements relative to its predecessor standard, FAS 5. We examine the effect of the new standard on audit pricing. We first document that UTB-related audit fees increased following the implementation of FIN 48. However, we also find that this increase is primarily driven by a spike in the audit pricing of UTBs in 2007. Indeed, we find that the audit pricing of UTBs in the 2008–2012 period is not significantly different from that of the 2002–2006 period. We interpret these results to indicate that although firms incurred significant FIN 48 implementation costs, the ongoing audit pricing of UTBs under FIN 48 is similar to that of FAS 5. Our findings suggest that any potential benefits of FIN 48 may outweigh associated costs related to a temporary increase in audit fees. JEL Classifications: H25; M40; M41; M42; M48.","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":null,"pages":null},"PeriodicalIF":1.6,"publicationDate":"2016-10-24","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68957714","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
{"title":"Discussion of Taxes, Investors, and Managers: Exploring the Taxation of Foreign Investors in U.S. REITs","authors":"S. Laplante","doi":"10.2308/ATAX-51540","DOIUrl":"https://doi.org/10.2308/ATAX-51540","url":null,"abstract":"","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":null,"pages":null},"PeriodicalIF":1.6,"publicationDate":"2016-07-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68958152","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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