Abstract

http://ssrn.com/abstract=1594936
 
 

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Home Country Tax System Characteristics and Corporate Tax Avoidance: International Evidence


T. J. Atwood


Florida State University

Michael S. Drake


Brigham Young University - Marriott School

James N. Myers


University of Arkansas

Linda A. Myers


University of Arkansas

November 20, 2012

Accounting Review, Vol. 87, No. 6, 2012 doi: 10.2308/accr-50222

Abstract:     
We examine whether three tax system characteristics – required book-tax conformity, worldwide versus territorial approach, and perceived strength of enforcement – impact corporate tax avoidance across countries after controlling for firm-specific factors previously shown to be associated with tax avoidance (i.e., performance, size, operating costs, leverage, growth, the presence of multinational operations, and industry) and for other cross-country factors (i.e., statutory corporate tax rates, earnings volatility, and institutional factors). We find that, on average, firms avoid taxes less when required book-tax conformity is higher, a worldwide approach is used, and tax enforcement is perceived to be stronger. However, the relations between tax avoidance and all three tax systems characteristics are contextual and depend on the extent to which management compensation comes from variable pay, including bonuses, stock awards, and stock options.

Keywords: Tax avoidance, tax systems, book-tax conformity, managerial incentives

JEL Classification: M41, H20, H21, H25, G15, G18

Accepted Paper Series


Not Available For Download

Date posted: April 23, 2010 ; Last revised: November 20, 2012

Suggested Citation

Atwood, T. J. and Drake, Michael S. and Myers, James N. and Myers, Linda A., Home Country Tax System Characteristics and Corporate Tax Avoidance: International Evidence (November 20, 2012). Accounting Review, Vol. 87, No. 6, 2012 doi: 10.2308/accr-50222. Available at SSRN: http://ssrn.com/abstract=1594936 or http://dx.doi.org/10.2139/ssrn.1594936

Contact Information

T. J. Atwood (Contact Author)
Florida State University ( email )
Tallahasse, FL 32306
United States
Michael S. Drake
Brigham Young University - Marriott School ( email )
United States
James N. Myers
University of Arkansas ( email )
Business Bldg. 454
Fayetteville, AR 72701
United States
Linda A. Myers
University of Arkansas ( email )
Fayetteville, AR 72701
United States
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