Abstract

http://ssrn.com/abstract=2153187
 


 



Is Tax Avoidance Related to Firm Risk?


David A. Guenther


University of Oregon - Department of Accounting

Steven R. Matsunaga


University of Oregon

Brian M. Williams


Indiana University - Kelley School of Business - Department of Accounting

January 2016

Accounting Review, Forthcoming

Abstract:     
We test whether tax avoidance strategies are associated with greater firm risk. We find that low tax rates tend to be more persistent than high tax rates and that measures of tax avoidance commonly used in the literature are generally not associated with either future tax rate volatility or future overall firm risk. Our evidence suggests that, on average, corporate tax avoidance is accomplished using strategies that are persistent and do not increase firm risk. We also find that the volatility of cash tax rates is associated with future stock volatility, suggesting that tax rate volatility and overall firm risk are related.

Keywords: effective tax rates; tax avoidance; firm risk

JEL Classification: M41


Not Available For Download

Date posted: September 27, 2012 ; Last revised: February 4, 2016

Suggested Citation

Guenther, David A. and Matsunaga, Steven R. and Williams, Brian M., Is Tax Avoidance Related to Firm Risk? (January 2016). Accounting Review, Forthcoming. Available at SSRN: http://ssrn.com/abstract=2153187 or http://dx.doi.org/10.2139/ssrn.2153187

Contact Information

David A. Guenther
University of Oregon - Department of Accounting ( email )
Lundquist College of Business
1208 University of Oregon
Eugene, OR 97403
United States
541-346-5384 (Phone)
Steven R. Matsunaga (Contact Author)
University of Oregon ( email )
1280 University of Oregon
Eugene, OR 97403
United States
Brian M. Williams
Indiana University - Kelley School of Business - Department of Accounting ( email )
1309 E. 10th Street
Bloomington, IN 47405
United States

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