Abstract

http://ssrn.com/abstract=2303836
 
 

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Corporate Political Connections and Tax Aggressiveness


Chansog (Francis) Kim


The State University of New York at Stony Brook

Liandong Zhang


City University of Hong Kong

August 12, 2014

Contemporary Accounting Research, Forthcoming

Abstract:     
This study investigates the relation between corporate political connections and tax aggressiveness. We study a broad array of corporate political activities, including the employment of connected directors, campaign contributions, and lobbying. Using a large hand-collected dataset of U.S. firms’ political connections, we find that politically connected firms are more tax aggressive than non-connected firms, after controlling for other determinants of tax aggressiveness, industry and year fixed effects, and the endogenous choice of being politically connected. Our findings are robust to various measures of political connections and tax aggressiveness. These results are consistent with the conjecture that politically connected firms are more tax aggressive because of their lower expected cost of tax enforcement, better information regarding tax law and enforcement changes, lower capital market pressure for transparency, and greater risk-taking tendencies induced by political connections.

Number of Pages in PDF File: 56

Keywords: Political connection, tax aggressiveness, tax avoidance, campaign contribution, lobbying

JEL Classification: H26, D72, G34

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Date posted: August 1, 2013 ; Last revised: August 16, 2014

Suggested Citation

Kim, Chansog (Francis) and Zhang, Liandong, Corporate Political Connections and Tax Aggressiveness (August 12, 2014). Contemporary Accounting Research, Forthcoming. Available at SSRN: http://ssrn.com/abstract=2303836 or http://dx.doi.org/10.2139/ssrn.2303836

Contact Information

Chansog (Francis) Kim
The State University of New York at Stony Brook ( email )
New York 1790
Stony Brook, NY 11794
United States
248-525-4051 (Phone)
631-632-9412 (Fax)
Liandong Zhang (Contact Author)
City University of Hong Kong ( email )
83 Tat Chee Avenue
Kowloon
Hong Kong
China
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