M. Howard, Katherine A. Pancak, Douglas A. Shackelford
ABSTRACT Exploiting a 2004 reduction in a unique capital gains withholding tax for foreign investors in U.S. publicly traded REITs, this paper explores both the sensitivity of real estate investors to changes in their own taxes and the reaction of real estate managers to changes in their investors' taxes. We find that both foreign investors and REIT managers responded to the tax change. This is consistent with taxes both restricting the flow of foreign capital into U.S. REITs and affecting the management of their real estate properties. To our knowledge, this is the first paper documenting that U.S. managers change their U.S. operations in response to the tax positions of foreign investors. This work should spur further study of the interplay between real estate and income taxes, the role of taxes on foreign portfolio investment, and the role of taxes on real managerial decisions. It should also be informative to policymakers who recently relaxed the discriminatory tax treatment for foreign investors in U...
{"title":"Taxes, Investors, and Managers: Exploring the Taxation of Foreign Investors in U.S. REITs","authors":"M. Howard, Katherine A. Pancak, Douglas A. Shackelford","doi":"10.2308/ATAX-51506","DOIUrl":"https://doi.org/10.2308/ATAX-51506","url":null,"abstract":"ABSTRACT Exploiting a 2004 reduction in a unique capital gains withholding tax for foreign investors in U.S. publicly traded REITs, this paper explores both the sensitivity of real estate investors to changes in their own taxes and the reaction of real estate managers to changes in their investors' taxes. We find that both foreign investors and REIT managers responded to the tax change. This is consistent with taxes both restricting the flow of foreign capital into U.S. REITs and affecting the management of their real estate properties. To our knowledge, this is the first paper documenting that U.S. managers change their U.S. operations in response to the tax positions of foreign investors. This work should spur further study of the interplay between real estate and income taxes, the role of taxes on foreign portfolio investment, and the role of taxes on real managerial decisions. It should also be informative to policymakers who recently relaxed the discriminatory tax treatment for foreign investors in U...","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":null,"pages":null},"PeriodicalIF":1.6,"publicationDate":"2016-06-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68958064","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}
Sean McGuire, Stevanie S. Neuman, Adam Olson, Thomas C. Omer
ABSTRACT The Internal Revenue Code allows firms to carry excess tax losses forward to offset future taxable income and reduce taxes. Consistent with tax loss carryforwards (TLCFs) creating a significant asset, prior research finds that investors positively value TLCFs. However, investors face significant uncertainty about whether firms will have sufficient future taxable income to benefit from TLCFs. We hypothesize that investors' valuation of new TLCFs will vary with firms' prior tax avoidance behavior because it signals firms' abilities to generate taxable income to offset TLCFs through tax planning. We confirm that investors assign a positive value to new TLCFs and find that investors' valuation varies with firms' prior tax avoidance behavior. Investors positively value TLCFs when firms exhibit high variability in prior tax avoidance and high levels of prior tax avoidance. Our results are incremental to the effect of changes in the valuation allowance on investors' valuation of new TLCFs. JEL Classific...
{"title":"Do Investors Use Prior Tax Avoidance when Pricing Tax Loss Carryforwards","authors":"Sean McGuire, Stevanie S. Neuman, Adam Olson, Thomas C. Omer","doi":"10.2308/ATAX-51483","DOIUrl":"https://doi.org/10.2308/ATAX-51483","url":null,"abstract":"ABSTRACT The Internal Revenue Code allows firms to carry excess tax losses forward to offset future taxable income and reduce taxes. Consistent with tax loss carryforwards (TLCFs) creating a significant asset, prior research finds that investors positively value TLCFs. However, investors face significant uncertainty about whether firms will have sufficient future taxable income to benefit from TLCFs. We hypothesize that investors' valuation of new TLCFs will vary with firms' prior tax avoidance behavior because it signals firms' abilities to generate taxable income to offset TLCFs through tax planning. We confirm that investors assign a positive value to new TLCFs and find that investors' valuation varies with firms' prior tax avoidance behavior. Investors positively value TLCFs when firms exhibit high variability in prior tax avoidance and high levels of prior tax avoidance. Our results are incremental to the effect of changes in the valuation allowance on investors' valuation of new TLCFs. JEL Classific...","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":null,"pages":null},"PeriodicalIF":1.6,"publicationDate":"2016-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68958005","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}
Donna D. Bobek, Jason Chen, Amy M. Hageman, Yu Tian
ABSTRACT The U.S. federal income tax system includes numerous incentives intended to encourage many behaviors. However, these incentives add complexity. This study investigates how one source of complexity, the number of different incentives, affects individuals' use of tax incentives. The results from two experiments detect no evidence that having more (versus fewer) incentive choices (i.e., high choice complexity) affects individuals' decisions to engage in the targeted behavior or select an incentive. However, the results do show that individuals faced with high choice complexity are more likely to make errors and less likely to choose the optimal incentive. Further, high choice complexity leads to greater perceived complexity and difficulty, which, in turn, is related to less positive emotions and more anxiety. Thus, high choice complexity has negative consequences on individuals. This study also contributes to the choice complexity literature by examining its effect on making an optimal choice.
{"title":"Are More Choices Better? An Experimental Investigation of the Effects of Multiple Tax Incentives","authors":"Donna D. Bobek, Jason Chen, Amy M. Hageman, Yu Tian","doi":"10.2308/ATAX-51478","DOIUrl":"https://doi.org/10.2308/ATAX-51478","url":null,"abstract":"ABSTRACT The U.S. federal income tax system includes numerous incentives intended to encourage many behaviors. However, these incentives add complexity. This study investigates how one source of complexity, the number of different incentives, affects individuals' use of tax incentives. The results from two experiments detect no evidence that having more (versus fewer) incentive choices (i.e., high choice complexity) affects individuals' decisions to engage in the targeted behavior or select an incentive. However, the results do show that individuals faced with high choice complexity are more likely to make errors and less likely to choose the optimal incentive. Further, high choice complexity leads to greater perceived complexity and difficulty, which, in turn, is related to less positive emotions and more anxiety. Thus, high choice complexity has negative consequences on individuals. This study also contributes to the choice complexity literature by examining its effect on making an optimal choice.","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":null,"pages":null},"PeriodicalIF":1.6,"publicationDate":"2016-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68957945","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}
Brian C. Spilker, Bryan W. Stewart, Jaron H. Wilde, David A. Wood
ABSTRACT This study compares the client advocacy attitudes of U.S. tax professionals who do U.S. tax work in the U.S. and Indian tax professionals who do U.S. tax work offshore. We find that experienced U.S. tax professionals have stronger client advocacy attitudes than experienced Indian tax professionals, while the client advocacy attitudes of inexperienced U.S. and inexperienced Indian tax professionals are not significantly different. Further, client advocacy attitudes of experienced U.S. tax professionals are stronger than advocacy attitudes of inexperienced U.S. tax professionals while the client advocacy attitudes of experienced Indian tax professionals are not different from advocacy attitudes of inexperienced Indian tax professionals. We also provide evidence that the client advocacy attitudes of experienced U.S. tax professionals are positively associated with their recommendations of the client-preferred position, while the client advocacy attitudes of experienced Indian tax professionals are n...
{"title":"A Comparison of U.S. and Offshore-Indian Tax Professionals’ Client Advocacy Attitudes and Client Recommendations","authors":"Brian C. Spilker, Bryan W. Stewart, Jaron H. Wilde, David A. Wood","doi":"10.2308/ATAX-51502","DOIUrl":"https://doi.org/10.2308/ATAX-51502","url":null,"abstract":"ABSTRACT This study compares the client advocacy attitudes of U.S. tax professionals who do U.S. tax work in the U.S. and Indian tax professionals who do U.S. tax work offshore. We find that experienced U.S. tax professionals have stronger client advocacy attitudes than experienced Indian tax professionals, while the client advocacy attitudes of inexperienced U.S. and inexperienced Indian tax professionals are not significantly different. Further, client advocacy attitudes of experienced U.S. tax professionals are stronger than advocacy attitudes of inexperienced U.S. tax professionals while the client advocacy attitudes of experienced Indian tax professionals are not different from advocacy attitudes of inexperienced Indian tax professionals. We also provide evidence that the client advocacy attitudes of experienced U.S. tax professionals are positively associated with their recommendations of the client-preferred position, while the client advocacy attitudes of experienced Indian tax professionals are n...","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":null,"pages":null},"PeriodicalIF":1.6,"publicationDate":"2016-04-28","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68958050","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 CEO Narcissism and Corporate Tax Sheltering","authors":"Jennifer L. Brown","doi":"10.2308/ATAX-51295","DOIUrl":"https://doi.org/10.2308/ATAX-51295","url":null,"abstract":"","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":null,"pages":null},"PeriodicalIF":1.6,"publicationDate":"2016-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2308/ATAX-51295","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68957618","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: Prior research provides evidence that individual executives have a significant effect on firm-level tax policy. Further research has shown that having a corporate general counsel (GC) in a firm's top management team (top five highest-paid executives) significantly affects a firm's accounting and disclosure practices. In this paper, we examine the role of the GC in corporate tax policy. Specifically, we use the ascension of the corporate GC to top management as the identifying event in which the role and influence of the corporate GC becomes more salient. We find strong evidence that GC ascension to top management is associated with an increase in tax aggressiveness, as evidenced by greater book-tax differences and a higher likelihood of engaging in tax shelter activities. Data Availability: Data are obtained from public sources identified in the paper.
{"title":"General Counsel Prominence and Corporate Tax Policy","authors":"John L. Abernathy, Thomas R. Kubick, Adi Masli","doi":"10.2308/ATAX-51258","DOIUrl":"https://doi.org/10.2308/ATAX-51258","url":null,"abstract":"ABSTRACT: Prior research provides evidence that individual executives have a significant effect on firm-level tax policy. Further research has shown that having a corporate general counsel (GC) in a firm's top management team (top five highest-paid executives) significantly affects a firm's accounting and disclosure practices. In this paper, we examine the role of the GC in corporate tax policy. Specifically, we use the ascension of the corporate GC to top management as the identifying event in which the role and influence of the corporate GC becomes more salient. We find strong evidence that GC ascension to top management is associated with an increase in tax aggressiveness, as evidenced by greater book-tax differences and a higher likelihood of engaging in tax shelter activities. Data Availability: Data are obtained from public sources identified in the paper.","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":null,"pages":null},"PeriodicalIF":1.6,"publicationDate":"2016-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68957563","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: Using a new hand-collected database on state department of revenue (DOR) expenditures, this study examines the association between changes in state corporate tax enforcement expenditures and state-level tax collections during the 2000–2008 time period. The results, after addressing endogeneity concerns using a changes specification and state fixed effects, suggest a $1 increase (decrease) in current period corporate enforcement is associated with an $8 to $11 increase (decrease) in state tax collections two years into the future. The association appears to be attenuated in states with restrictive tax policies (i.e., unitary/combined reporting and related-party add-back provisions) suggesting that enforcement and restrictive tax policies could serve as substitutes. JEL Classifications: H26; H71; H72. Data Availability: Enforcement data were hand collected from state revenue department annual reports and by contacting state corporate income tax personnel. All annual reports are publicly available.
{"title":"The Effects of Changes in State Tax Enforcement on Corporate Income Tax Collections","authors":"Sanjay Gupta, Dan Lynch","doi":"10.2308/ATAX-51301","DOIUrl":"https://doi.org/10.2308/ATAX-51301","url":null,"abstract":"ABSTRACT: Using a new hand-collected database on state department of revenue (DOR) expenditures, this study examines the association between changes in state corporate tax enforcement expenditures and state-level tax collections during the 2000–2008 time period. The results, after addressing endogeneity concerns using a changes specification and state fixed effects, suggest a $1 increase (decrease) in current period corporate enforcement is associated with an $8 to $11 increase (decrease) in state tax collections two years into the future. The association appears to be attenuated in states with restrictive tax policies (i.e., unitary/combined reporting and related-party add-back provisions) suggesting that enforcement and restrictive tax policies could serve as substitutes. JEL Classifications: H26; H71; H72. Data Availability: Enforcement data were hand collected from state revenue department annual reports and by contacting state corporate income tax personnel. All annual reports are publicly available.","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":null,"pages":null},"PeriodicalIF":1.6,"publicationDate":"2016-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68957637","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 explore whether an accounting treatment similar to that required under IFRS improves the ability of the stock-based compensation component of deferred tax assets to predict future tax payments, relative to U.S. GAAP. Using hand-collected data for SP M41.
{"title":"Do Stock-Based Compensation Deferred Tax Assets Provide Incremental Information about Future Tax Payments?","authors":"Derek Johnston, L. Kutcher","doi":"10.2308/ATAX-51237","DOIUrl":"https://doi.org/10.2308/ATAX-51237","url":null,"abstract":"ABSTRACT: We explore whether an accounting treatment similar to that required under IFRS improves the ability of the stock-based compensation component of deferred tax assets to predict future tax payments, relative to U.S. GAAP. Using hand-collected data for SP M41.","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":null,"pages":null},"PeriodicalIF":1.6,"publicationDate":"2016-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68957415","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: Prior studies of the Jobs and Growth Tax Relief Reconciliation Act of 2003, which cut individual tax rates on both dividends and capital gains, unexpectedly find that non-dividend firms were more favorably affected by this legislation than dividend firms. We address this apparent inconsistency by extending prior research to account for significant shifts in institutional holdings for non-dividend stocks relative to dividend stocks following the tax change. These clientele shifts were especially concentrated among high-risk firms and provide a plausible explanation for the results reported in prior literature. Specifically, we find that significant increases in institutional ownership for high-risk firms led to larger reductions in the implied cost of equity capital compared to other firms that were more heavily favored by individuals following the reduction in shareholder tax rates.
摘要:对2003年《就业与增长税收减免协调法案》(Jobs and Growth Tax Relief Reconciliation Act)的研究意外地发现，非股息公司比股息公司更受该法案的影响。该法案降低了股息和资本利得的个人税率。我们通过扩展先前的研究来解决这种明显的不一致，以解释税收变化后机构持有的非股息股票相对于股息股票的重大变化。这些客户转移尤其集中在高风险公司中，并为先前文献中报告的结果提供了合理的解释。具体来说，我们发现，与其他在股东税率降低后更受个人青睐的公司相比，高风险公司机构所有权的显著增加导致了股权资本隐含成本的更大下降。
{"title":"Shifts in Ownership Composition and Changes in the Implied Cost of Equity Capital for Dividend and Non-Dividend Stocks Following JGTRRA03","authors":"Shane R. Stinson, Robert C. Ricketts","doi":"10.2308/ATAX-51302","DOIUrl":"https://doi.org/10.2308/ATAX-51302","url":null,"abstract":"ABSTRACT: Prior studies of the Jobs and Growth Tax Relief Reconciliation Act of 2003, which cut individual tax rates on both dividends and capital gains, unexpectedly find that non-dividend firms were more favorably affected by this legislation than dividend firms. We address this apparent inconsistency by extending prior research to account for significant shifts in institutional holdings for non-dividend stocks relative to dividend stocks following the tax change. These clientele shifts were especially concentrated among high-risk firms and provide a plausible explanation for the results reported in prior literature. Specifically, we find that significant increases in institutional ownership for high-risk firms led to larger reductions in the implied cost of equity capital compared to other firms that were more heavily favored by individuals following the reduction in shareholder tax rates.","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":null,"pages":null},"PeriodicalIF":1.6,"publicationDate":"2016-04-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68957655","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 effect of CEO narcissism on an especially aggressive form of corporate tax avoidance: tax sheltering. Narcissism is a multifaceted personality trait associated with a sens...
{"title":"CEO Narcissism and Corporate Tax Sheltering","authors":"K. Olsen, James Stekelberg","doi":"10.2308/ATAX-51251","DOIUrl":"https://doi.org/10.2308/ATAX-51251","url":null,"abstract":"ABSTRACT: We examine the effect of CEO narcissism on an especially aggressive form of corporate tax avoidance: tax sheltering. Narcissism is a multifaceted personality trait associated with a sens...","PeriodicalId":45477,"journal":{"name":"Journal of the American Taxation Association","volume":null,"pages":null},"PeriodicalIF":1.6,"publicationDate":"2016-03-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"https://sci-hub-pdf.com/10.2308/ATAX-51251","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"68957435","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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