Abstract

http://ssrn.com/abstract=2097966
 
 

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The Influence of Institutional Investment on Tax Aggressiveness


Joy L. Embree


University of Nebraska at Lincoln

Aaron D. Crabtree


University of Nebraska at Lincoln

June 4, 2012

2012 AAA Annual Meeting - Tax Concurrent Sessions

Abstract:     
This study investigates the association between tax reporting aggressiveness and types of institutional ownership. We find firms with higher levels of transient institutional owners are more likely to engage in aggressive tax planning leading to permanent and temporary differences. These results are robust to Granger causality tests and to a lesser degree changes specification. We find firms with more quasi-indexer ownership are less likely to engage in tax planning leading to permanent differences, but these results are sensitive to invariant time series characteristics of the tax measures. We find an association, albeit weak, between firms with dedicated institutional ownership and temporary differences. We also examine cash taxes paid over the past five years and find firms with higher levels of institutional investors are statistically more likely to own firms with lower cash effective tax rates. This holds regardless of heterogeneity in institutional ownership, however the economic significance is greatest for the transient group.

Number of Pages in PDF File: 47

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Date posted: July 2, 2012  

Suggested Citation

Embree, Joy L. and Crabtree, Aaron D., The Influence of Institutional Investment on Tax Aggressiveness (June 4, 2012). 2012 AAA Annual Meeting - Tax Concurrent Sessions. Available at SSRN: http://ssrn.com/abstract=2097966 or http://dx.doi.org/10.2139/ssrn.2097966

Contact Information

Joy L. Embree (Contact Author)
University of Nebraska at Lincoln ( email )
Lincoln, NE 68588
United States
Aaron D. Crabtree
University of Nebraska at Lincoln ( email )
Lincoln, NE 68583
United States
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