Abstract

http://ssrn.com/abstract=1761477
 
 

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Network Ties Among Low-Tax Firms


Jennifer L. Brown


Arizona State University (ASU) - W.P. Carey School of Business

Katharine D. Drake


University of Arizona - Department of Accounting

September 11, 2013

Accounting Review, Forthcoming
2011 American Taxation Association Midyear Meeting: JATA Conference

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.

Number of Pages in PDF File: 52

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Date posted: February 15, 2011 ; Last revised: October 25, 2013

Suggested Citation

Brown, Jennifer L. and Drake, Katharine D., Network Ties Among Low-Tax Firms (September 11, 2013). Accounting Review, Forthcoming; 2011 American Taxation Association Midyear Meeting: JATA Conference. Available at SSRN: http://ssrn.com/abstract=1761477 or http://dx.doi.org/10.2139/ssrn.1761477

Contact Information

Jennifer L. Brown (Contact Author)
Arizona State University (ASU) - W.P. Carey School of Business ( email )
Tempe, AZ 85287-3706
United States
(480)965-6618 (Phone)
(480) 965-8392 (Fax)
Katharine D. Drake
University of Arizona - Department of Accounting ( email )
Tucson, AZ 85721
United States
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