Abstract

http://ssrn.com/abstract=1578485
 
 

References (23)



 
 

Citations (9)



 


 



Early Evidence on the Determinants of Unrecognized Tax Benefits


Richard A. Cazier


Texas Christian University

Sonja O. Rego


Indiana University - Kelley School of Business - Department of Accounting

Xiaoli (Shaolee) Tian


Ohio State University (OSU) - Fisher College of Business

Ryan J. Wilson


University of Oregon - Lundquist College of Business

September 14, 2009


Abstract:     
This study examines the association between disclosures of unrecognized tax benefits made under FASB Interpretation No. 48 and existing measures of tax avoidance. Prior research suggests managers use discretion in accounting for income tax contingencies to meet key earnings targets. It is not clear however, whether such opportunism mitigates the signal about tax avoidance activity provided by these contingencies or whether the opportunistic use of these reserves continued following the adoption of FIN 48. We find that both the level of unrecognized tax benefits at fiscal year-end and changes in the liability linked to current year tax positions are related to firm characteristics that prior research has found to be associated with tax avoidance activity. Further, we document a significant and negative association between firms’ cash effective tax rates and the ending balance of unrecognized tax benefits. We believe this analysis will be useful to researchers and financials statement users that rely on financial statement-based measures of tax avoidance to evaluate corporate tax planning.

Number of Pages in PDF File: 42

Keywords: Unrecognized tax benefits, FIN 48, tax contingency, tax cushion, tax avoidance

JEL Classification: M40, M41, M49

working papers series





Download This Paper

Date posted: March 30, 2010  

Suggested Citation

Cazier, Richard A. and Rego, Sonja O. and Tian, Xiaoli (Shaolee) and Wilson, Ryan J., Early Evidence on the Determinants of Unrecognized Tax Benefits (September 14, 2009). Available at SSRN: http://ssrn.com/abstract=1578485 or http://dx.doi.org/10.2139/ssrn.1578485

Contact Information

Richard A. Cazier
Texas Christian University ( email )
Fort Worth, TX 76129
United States
Sonja O. Rego (Contact Author)
Indiana University - Kelley School of Business - Department of Accounting ( email )
1309 E. 10th Street
Bloomington, IN 47405
United States
812 855-6356 (Phone)
HOME PAGE: http://kelley.iu.edu/Accounting/faculty/page12887.cfm?ID=33017

Xiaoli (Shaolee) Tian
Ohio State University (OSU) - Fisher College of Business ( email )
2100 Neil Avenue
Columbus, OH 43210-1144
United States
Ryan J. Wilson
University of Oregon - Lundquist College of Business ( email )
1280 University of Oregon
Eugene, OR 97403
United States
Feedback to SSRN


Paper statistics
Abstract Views: 1,652
Downloads: 487
Download Rank: 32,465
References:  23
Citations:  9

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo1 in 0.485 seconds