Does Past Experience Affect Future Behavior? Evidence from Estate Tax Avoidance Behavior

ABSTRACT This study examines (1) whether network ties help explain variation in tax avoidance, and (2) how the relation between network ties and tax avoidance varies depending on the nature and context of those ties. We posit that information on a range of tax-avoidance strategies is shared among firms through their social network connections. Using board interlocks to proxy for these connections, we find that firms with greater board ties to low-tax firms have lower cash ETRs themselves. Ties to low-tax firms are more influential when the focal firm and its network partner are operationally and strategically similar, as are ties created by executive directors. Board ties to low-tax firms are also more influential when the focal firm and its network partner engage the same local auditor. Overall, our results suggest that the influence of firms' network ties on their tax-avoidance behavior depends on the character of those ties.

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The Effects of Regulatory Scrutiny on Tax Avoidance: An Examination of SEC Comment Letters

The Accounting Review ◽

10.2308/accr-51433 ◽

2016 ◽

Vol 91 (6) ◽

pp. 1751-1780 ◽

Cited By ~ 70

Author(s):

Thomas R. Kubick ◽

Daniel P. Lynch ◽

Michael A. Mayberry ◽

Thomas C. Omer

Keyword(s):

Indirect Effect ◽

Avoidance Behavior ◽

Tax Avoidance ◽

Regulatory Scrutiny ◽

Comment Letters ◽

To Receive ◽

Tax Costs

ABSTRACT This study examines the tax avoidance behavior of firms prior to the issuance, and following the resolution, of SEC tax comment letters. We find that firms that appear to engage in greater tax avoidance are more likely to receive a tax-related SEC comment letter. We also find that firms receiving a tax-related SEC comment letter, relative to firms receiving a non-tax comment letter, subsequently decrease their tax avoidance behavior consistent with an increase in expected tax costs. Additionally, we document evidence consistent with other firms that do not receive a comment letter reacting to multiple publicly disclosed tax-related comment letters within their industry by increasing their reported GAAP ETR, consistent with an indirect effect of regulatory scrutiny on certain types of tax avoidance.

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A Voluntary Tax?: New Perspectives on Sophisticated Estate Tax Avoidance

Journal of Risk & Insurance ◽

10.2307/252468 ◽

1979 ◽

Vol 46 (3) ◽

pp. 556

Author(s):

Mark S. Dorfman ◽

George Cooper

Keyword(s):

Tax Avoidance ◽

Estate Tax

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Institutional Shareholders' Investment Horizons and Tax Avoidance

Journal of the American Taxation Association ◽

10.2308/atax-50315 ◽

2012 ◽

Vol 35 (1) ◽

pp. 111-134 ◽

Cited By ~ 45

Author(s):

Inder K. Khurana ◽

William J. Moser

Keyword(s):

Avoidance Behavior ◽

Firm Value ◽

Tax Avoidance ◽

Institutional Ownership ◽

Managerial Opportunism ◽

Tax Savings ◽

Institutional Shareholders

ABSTRACT: We investigate whether the level of ownership by institutional shareholders with a long-term horizon is associated with firms' tax avoidance activities. In theory, tax avoidance increases firm value through tax savings; however, institutions with long-term investment horizons are likely to discourage tax avoidance activities if such activities encourage managerial opportunism and reduce transparency. Using a sample of firms with institutional ownership data from 1995–2008, we find less tax avoidance in firms held by long-term institutional shareholders. Probing further, we find these results are generally driven by poorly governed firms. Overall, our results highlight the role of certain types of institutional shareholders in affecting a firm's tax avoidance behavior.

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