Abstract

http://ssrn.com/abstract=2374016
 


 



Investor Valuation of Tax Avoidance and the Volatility of Tax Outcomes


Katharine D. Drake


University of Arizona - Department of Accounting

Stephen J. Lusch


University of Notre Dame - Moreau Seminary

James Stekelberg


University of Arizona - Department of Accounting

October 30, 2014


Abstract:     
We examine whether investor valuation of tax avoidance is contingent upon the volatility of the firm’s tax outcomes. Our results suggest that investors positively value tax avoidance; however, greater tax volatility moderates this relationship. We also find that in the post-FIN 48 period, disclosures regarding uncertain tax positions are informative to investors and are generally used for valuation incremental to the information previously available about tax avoidance and tax volatility in the financial statements. The results of our study suggest that tax avoidance and the volatility of tax outcomes are not independent and should be considered jointly rather than in isolation.

Number of Pages in PDF File: 40

Keywords: corporate tax avoidance, tax risk, uncertain tax positions, firm valuation

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Date posted: January 3, 2014 ; Last revised: November 1, 2014

Suggested Citation

Drake, Katharine D. and Lusch, Stephen J. and Stekelberg, James, Investor Valuation of Tax Avoidance and the Volatility of Tax Outcomes (October 30, 2014). Available at SSRN: http://ssrn.com/abstract=2374016 or http://dx.doi.org/10.2139/ssrn.2374016

Contact Information

Katharine D. Drake
University of Arizona - Department of Accounting ( email )
Tucson, AZ 85721
United States
Stephen J. Lusch
University of Notre Dame - Moreau Seminary ( email )
Notre Dame, IN 46556
United States
James Stekelberg (Contact Author)
University of Arizona - Department of Accounting ( email )
Tucson, AZ 85721
United States
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