Analysis of Unsuccessful Tax Avoiders

Daniel Saavedra

Massachusetts Institute of Technology (MIT) - Sloan School of Management

December 31, 2013

A longstanding question is why an important fraction of public companies pay relatively large amounts in taxes, apparently forgoing the benefits of tax avoidance. This study finds that firms with high effective tax rates are, to some extent, unsuccessful tax avoiders. These firms engage in tax avoidance activities but later return part of their tax savings to tax authorities. Moreover, lenders penalize these firms with higher loan spreads and more restrictive contract terms. This effect is economically important and represents a cost of engaging in tax avoidance activities. Overall, this study contributes to our understanding of corporate tax behavior by presenting the first study that analyzes unsuccessful tax avoiders.

Number of Pages in PDF File: 72

Keywords: Unsuccessful Tax Avoidance, Failed Tax Strategies, Tax Settlements, Debt Contracting

JEL Classification: G21, G28, G32, H25, H32

working papers series

Download This Paper

Date posted: September 25, 2013 ; Last revised: January 2, 2014

Suggested Citation

Saavedra, Daniel, Analysis of Unsuccessful Tax Avoiders (December 31, 2013). Available at SSRN: http://ssrn.com/abstract=2330024 or http://dx.doi.org/10.2139/ssrn.2330024

Contact Information

Daniel Saavedra (Contact Author)
Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )
77 Massachusetts Ave.
Cambridge, MA 02142
United States
Feedback to SSRN

Paper statistics
Abstract Views: 457
Downloads: 205
Download Rank: 82,493

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo4 in 0.985 seconds