Investment Opportunity Sets, Operating Uncertainty, and Capital Market Pressure: Determinants of Investments in Tax Shelter Activities?

2012 ◽  
Author(s):  
Sean T. McGuire ◽  
Thomas C. Omer ◽  
Jaron Wilde
Keyword(s):  
Capital Market ◽  
Investment Opportunity ◽  
Opportunity Sets ◽  
Tax Shelter ◽  
Market Pressure

Investment Opportunity Sets, Operating Uncertainty, and Capital Market Pressure: Determinants of Investments in Tax Shelter Activities?

2013 ◽  
Vol 36 (1) ◽  
pp. 1-26 ◽  
Author(s):  
Sean T. McGuire ◽  
Thomas C. Omer ◽  
Jaron H. Wilde
Keyword(s):  
Capital Market ◽  
Tax Avoidance ◽  
Investment Strategy ◽  
Data Availability ◽  
Investment Behavior ◽  
Investment Opportunity ◽  
Opportunity Sets ◽  
Tax Shelter ◽  
Tax Shelters ◽  
Market Pressure

ABSTRACT Prior research documents substantial variation in firms' tax avoidance activities and questions why some firms choose not to take advantage of the apparent benefits of tax planning (i.e., the “undersheltering puzzle”). We provide additional insight into the undersheltering puzzle by investigating the decision to invest in a tax shelter from the perspective of a firm's overall investment strategy. We examine whether three factors associated with traditional investment behavior (firms' investment opportunity sets, operating uncertainty, and capital market pressure) are also associated with investments in tax shelter activities. Our results suggest that firms with large investment opportunity sets and higher operating uncertainty are less likely to invest in tax shelters. We also find that firms with greater capital market pressure are more likely to invest in tax sheltering activities. Overall, we find that factors that influence firms' investment behavior help to explain why more firms do not invest in tax shelters. Data Availability: All data used in this study are available from publicly available sources identified in the manuscript. JEL Classifications: H25, H26, M41

Organized Labor and Inventory Stockpiling

2021 ◽  
Author(s):  
Sophia J.W. Hamm ◽  
Boo Chun Jung ◽  
Woo-Jong Lee ◽  
Daniel G. Yang
Keyword(s):  
Capital Market ◽  
Bargaining Power ◽  
Investment Decision ◽  
Organized Labor ◽  
Costs And Benefits ◽  
Investment Decision Making ◽  
Major Stakeholder ◽  
Information Spillover ◽  
Labor Negotiations ◽  
Market Pressure

We document that managers stockpile excess inventory to mitigate the operational risk posed by labor unions and to maintain bargaining power in labor negotiations. Inventory levels are higher for union firms and are incrementally higher preceding the renegotiation of collective bargaining agreements with unions. Inventory stockpiling at union firms is more salient when capital market pressure for transparency or information spillover from peers constrains managers from using disclosure strategies. We further show that managers weigh the costs and benefits of inventory stockpiling, as holding excess inventory due to the presence of a union is negatively associated with future profitability but provides the benefits of avoiding a stockout and mitigating negative outcomes from a strike. Our findings highlight the importance of a major stakeholder, i.e., labor, in managers' investment decision-making.

The Role of Trust in the Informal Investor's Investment Decision: An Exploratory Analysis

1997 ◽  
Vol 21 (4) ◽  
pp. 63-81 ◽  
Author(s):  
Richard T. Harrison ◽  
Mark R. Dibben ◽  
Colin M. Mason
Keyword(s):  
Venture Capital ◽  
Empirical Research ◽  
Capital Market ◽  
Investment Decision ◽  
Theoretical Models ◽  
Policy Implications ◽  
Investment Opportunity ◽  
Informal Investment ◽  
Informal Venture Capital

Research into the informal venture capital market is characterized by a focus on empirical research into the characteristics of the market and on the development and analysis of the public policy Implications of this empirical research. There has, however, been little systematic application or development of theoretical models and frameworks appropriate to the informal venture capital market. Nor, with a few recent exceptions, has the empirical analysis of the market moved on to examine issues surrounding the process of Informal investment rather than the outcomes of that process. In this paper we seek to rectify both of these deficiencies. First, we develop a framework for the elucidation of the concepts of swift trust and swift cooperation, and in so doing formalize and expand on the generally passing references to trust in the entrepreneurship and venture capital literatures. Second, we derive from this an operationable framework for analyzing trust and cooperation, which we apply to the informal Investment decision-making process. Using verbal protocol analysis of Investor reactions In real time to one particular investment opportunity, we empirically examine the role of trust and cooperation in the investors’ Initial screening of potential investment opportunities, and the investors’ assessment of the intermediary responsible for providing the initial referral of the Investment opportunity.

Capital Market Pressure, Disclosure Frequency-Induced Earnings/Cash Flow Conflict, and Managerial Myopia (Retracted)

2005 ◽  
Vol 80 (1) ◽  
pp. 1-20 ◽  
Author(s):  
Sanjeev Bhojraj ◽  
Robert Libby
Keyword(s):  
Stock Market ◽  
Cash Flow ◽  
Capital Market ◽  
Cash Flows ◽  
Mandatory Reporting ◽  
Managerial Myopia ◽  
Near Term ◽  
The Impact ◽  
Market Pressures ◽  
Market Pressure

We examine the effects of increased capital market pressure and disclosure frequency-induced earnings/cash flow conflict on myopic behavior. In our experiments, experienced financial managers choose between projects where a conflict exists between near-term earnings and total cash flow. Managers more often choose projects that they believe will maximize short-term earnings (and price) as opposed to total cash flows in response to increased capital market pressure resulting from a pending stock issuance, holding constant agency frictions and other stock market pressures. When faced with increased capital market pressure, changes in disclosure frequency cause managers to behave more or less myopically depending on the impact of the change on the pattern of earnings and the resulting earnings/cash flow conflict. Our study provides insights into managers' beliefs about stock market pressures, mandatory reporting, and the availability of alternative communications channels, and contributes to literature on managerial myopia and earnings management, as well as current debates over disclosure frequency.

scholarly journals The Influence Of Public Equity Ownership On Earnings Management Through The Manipulation Of Operational Activities

2014 ◽  
Vol 30 (6) ◽  
pp. 1847
Author(s):  
Yura Kim
Keyword(s):  
Earnings Management ◽  
Capital Market ◽  
Public Debt ◽  
Private Equity ◽  
Real Earnings Management ◽  
Operational Activities ◽  
Public Equity ◽  
Reported Earnings ◽  
The Impact ◽  
Market Pressure

This paper examines whether public equity firms and private equity firms with public debt exhibit different degrees of real earnings management, defined as the manipulation of operational activities in order to influence reported earnings. Public equity firms face intense capital market scrutiny that their private equity counterparts do not. Therefore, this studys comparison of the two types of firms provides insight on the impact of capital market pressure on real earnings management behaviors. My results show that public equity firms are more likely than private equity firms to opportunistically alter normal operations to improve earnings by pushing sales through discounts and promotions, and by lowering costs of sales through overproduction. I find no difference in abnormal discretionary expenses between public equity and private equity firms. Although private equity firms with public debt do not face the same capital market pressure that public equity firms face, they are not immune from incentives to engage in real earnings management. Specifically, I find that private equity firms with public debt engage in real earnings management as their debt moves closer to default. Moreover, private equity firms with public debt that do engage in real earnings management appear to emphasize the zero earnings benchmark, consistent with prior research, suggesting that this benchmark is of primary importance to creditors.

Nigeria will seek to ride out capital market pressure

2015 ◽  
Keyword(s):  
Capital Market ◽  
Content Type ◽  
Market Pressure

Headline NIGERIA: Regulators seek to ride out market pressure

scholarly journals PERAN PROFITABILITAS DALAM MEMEDIASI PENGARUH FINANCIAL LEVERAGE DAN INVESTMENT OPPORTUNITY SET TERHADAP KEBIJAKAN DIVIDEN DI BURSA EFEK INDONESIA

2018 ◽  
pp. 143
Author(s):  
Ni Made Dewi Puspita Sari ◽  
I Gusti Bagus Wiksuana
Keyword(s):  
Dividend Policy ◽  
Stock Exchange ◽  
Secondary Data ◽  
Manufacturing Companies ◽  
Investment Opportunity ◽  
Financial Leverage ◽  
Opportunity Sets ◽  
Analysis Technique ◽  
Investment Opportunity Set

The purpose of this study was to determine the role of profitability in mediating the effect of financial leverage and investment opportunity set on the dividend policy. The populations in this study were manufacturing companies listed on the Indonesia Stock Exchange. The sampling of the research was done by census and the number of samples were 12 companies. The data of research were secondary data obtained from Indonesia Stock Exchange website and Indonesian Capital Market Directory from 2011 to 2015. Testing of research hypothesis was conducted by using path analysis technique by tool of SPSS application.The results showed that financial leverage has a negative and significant effect on dividend policy. Investment opportunity set has negative and insignificant effect on dividend policy. Financial leverage has a positive and significant impact on profitability. Investment opportunity sets also have a positive and significant impact on profitability. Profitability has a positive and significant effect on dividend policy. Profitability is able to mediate the effect of financial leverage and investment opportunity set on dividend policy.

Conforming Tax Avoidance and Capital Market Pressure

2019 ◽  
Vol 94 (6) ◽  
pp. 1-30 ◽  
Author(s):  
Brad A. Badertscher ◽  
Sharon P. Katz ◽  
Sonja Olhoft Rego ◽  
Ryan J. Wilson
Keyword(s):  
Capital Market ◽  
Tax Avoidance ◽  
Future Research ◽  
Corporate Tax ◽  
Public Firms ◽  
Private And Public ◽  
Financial Income ◽  
Validation Tests ◽  
Market Pressures ◽  
Market Pressure

ABSTRACT In this study, we develop a measure of corporate tax avoidance that reduces both financial and taxable income, which we refer to as “book-tax conforming” tax avoidance. We use simulation analyses, LIFO/FIFO inventory method conversions, and samples of private and public firms to validate our measure. We then investigate the prevalence of conforming tax avoidance within a sample of public firms. Results from the validation tests indicate that our measure of conforming tax avoidance successfully captures book-tax conforming transactions. Consistent with expectations, we also find that the extent to which public firms engage in conforming tax avoidance varies systematically with the capital market pressures. Our study develops a new measure of conforming tax avoidance that should be useful in future research and provides new insights on the extent to which public firms are willing to reduce income tax liabilities at the expense of reporting lower financial income.

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