Abstract

http://ssrn.com/abstract=2330024
 


 



Analysis of Unsuccessful Tax Avoiders


Daniel Saavedra


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

December 31, 2013


Abstract:     
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


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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.
E62-416
Cambridge, MA 02142
United States
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