Abstract

http://ssrn.com/abstract=2374016
 


 



Investor Valuation of Tax Avoidance and Tax Risk


Katharine D. Drake


University of Arizona - Department of Accounting

Stephen J. Lusch


University of Kansas - Accounting and Information Systems Area

James Stekelberg


University of Arizona - Department of Accounting

December 9, 2015


Abstract:     
We examine whether investors value tax avoidance (measured as the level of cash ETRs) and tax risk (measured as the volatility of cash ETRs) and how these constructs interact to influence firm value. Our results suggest that investors positively value tax avoidance but negatively value tax risk, and that greater tax risk moderates the positive valuation of tax avoidance. Results of tests in the post-FIN 48 period suggest that disclosures of uncertain tax positions are informative to investors and are generally associated with firm value incremental to cash ETR-based measures of tax avoidance and risk. Broadly, our findings provide new evidence on how taxes affect firm value and suggest that tax avoidance and tax risk should be considered jointly rather than in isolation.

Number of Pages in PDF File: 48

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


Open PDF in Browser Download This Paper

Date posted: January 3, 2014 ; Last revised: December 10, 2015

Suggested Citation

Drake, Katharine D. and Lusch, Stephen J. and Stekelberg, James, Investor Valuation of Tax Avoidance and Tax Risk (December 9, 2015). 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 Kansas - Accounting and Information Systems Area ( email )
1300 Sunnyside Avenue
Lawrence, KS 66045
United States
James Stekelberg (Contact Author)
University of Arizona - Department of Accounting ( email )
Tucson, AZ 85721
United States
Feedback to SSRN


Paper statistics
Abstract Views: 2,038
Downloads: 406
Download Rank: 51,202

© 2016 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollobot1 in 2.203 seconds