Abstract

http://ssrn.com/abstract=1905544
 
 

Citations (7)



 


 



The Effect of Hedge Fund Activism on Corporate Tax Avoidance


C.S. Agnes Cheng


Hong Kong Polytechnic University - School of Accounting and Finance; Louisiana State University

Henry He Huang


Yeshiva University - Sy Syms School of Business

Yinghua Li


Arizona State University (ASU) - School of Accountancy

Jason Stanfield


Purdue University - Krannert School of Management

April 20, 2012

The Accounting Review 87, 1493-1526

Abstract:     
This paper examines the impact of hedge fund activism on corporate tax avoidance. We find that, relative to matched control firms, businesses targeted by hedge fund activists exhibit lower tax avoidance levels prior to hedge fund intervention, but experience increases in tax avoidance after the intervention. Moreover, findings suggest that the increase in tax avoidance is greater when activists have a successful track record of implementing tax changes and possess tax interest or knowledge as indicated by their SEC 13D filings. We also find that these greater tax savings do not appear to result from an increased use of high-risk and potentially illegal tax strategies, such as sheltering. Taken together, the results suggest that shareholder monitoring of firms, in the form of hedge fund activism, improves tax efficiency.

Number of Pages in PDF File: 50

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Date posted: August 5, 2011 ; Last revised: October 12, 2012

Suggested Citation

Cheng, C.S. Agnes and Huang, Henry He and Li, Yinghua and Stanfield, Jason, The Effect of Hedge Fund Activism on Corporate Tax Avoidance (April 20, 2012). The Accounting Review 87, 1493-1526. Available at SSRN: http://ssrn.com/abstract=1905544 or http://dx.doi.org/10.2139/ssrn.1905544

Contact Information

C.S. Agnes Cheng (Contact Author)
Hong Kong Polytechnic University - School of Accounting and Finance ( email )
Hung Hom, Kowloon
Hong Kong
Louisiana State University ( email )
E.J. Ourso College of Business Administration
2800 Business Education Complex
Baton Rouge, LA 70803
United States
Henry Huang
Yeshiva University - Sy Syms School of Business ( email )
New York, NY 10033
United States
8322763834 (Phone)
Yinghua Li
Arizona State University (ASU) - School of Accountancy ( email )
Tempe, AZ 85287
United States
480-965-5188 (Phone)
HOME PAGE: http://my.wpcarey.asu.edu/directory/people/profile.cfm?person=2255159
Jason W. Stanfield
Purdue University - Krannert School of Management ( email )
Krannert Building
403 W State Street
West Lafayette, IN 47907-1310
United States
(765) 494-9140 (Phone)
HOME PAGE: http://web.ics.purdue.edu/~jwstanfi
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