Financial Accounting Effects of Tax Aggressiveness: Contracting and Measurement
Anja De Waegenaere
Tilburg University - Center for Economic Research (CentER)
Richard C. Sansing
Tuck School of Business at Dartmouth
VU University Amsterdam
April 2, 2013
Tuck School of Business Working Paper No. 2010-83
This study examines a setting in which a tax reporting decision is delegated to a firm's tax manager. Using financial accounting measures of tax expense to evaluate the tax manager allows the fi rm to efficiently attain the level of tax avoidance it prefers, despite the fact that the consequences of the tax reporting decision will occur in the future. The study also examines how well two accounting measures of tax aggressiveness -- cash taxes paid and the unrecognized tax bene fit -- distinguish between conservative and aggressive fi rms.
Number of Pages in PDF File: 46
Keywords: FIN 48, tax reporting, contracting, unrecognized tax benefits, book income tax expense
JEL Classification: H25, M41
Date posted: October 25, 2010 ; Last revised: April 17, 2013
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