Abstract

http://ssrn.com/abstract=2403952
 


 



Is Use Tax Evasion a Competitive Advantage for E-tailers?


Jeffrey L. Hoopes


Ohio State University (OSU) - Department of Accounting & Management Information Systems

Jacob R. Thornock


University of Washington - Michael G. Foster School of Business

Braden Williams


University of Texas at Austin - Department of Accounting

July 10, 2015


Abstract:     
Many online retail firms (i.e., e-tailers) do not collect sales tax from the majority of their customers, providing these firms a potential competitive advantage over traditional retailers. We examine stock market returns and analysts’ sales forecast revisions surrounding federal legislative proposals, such as the Marketplace Fairness Act, that could erode this alleged competitive advantage for e-tailers. We find negative abnormal stock returns for e-tail firms relative to traditional retail firms, and find that analysts forecast a future reduction in sales revenue for e-tailers, following events that indicated an increased likelihood of federal sales tax legislation. These findings imply the existence of a competitive advantage for e-tailers, which advantage will potentially diminish with the enactment of federal sales tax legislation. These findings also suggest that providers of equity capital bear a portion of the incidence of the sales tax.

Number of Pages in PDF File: 51

Keywords: Sales tax, Marketplace Fairness Act

JEL Classification: H20, H25, H29, G14, G18


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Date posted: March 3, 2014 ; Last revised: July 11, 2015

Suggested Citation

Hoopes, Jeffrey L. and Thornock, Jacob R. and Williams, Braden, Is Use Tax Evasion a Competitive Advantage for E-tailers? (July 10, 2015). Available at SSRN: http://ssrn.com/abstract=2403952 or http://dx.doi.org/10.2139/ssrn.2403952

Contact Information

Jeffrey L. Hoopes (Contact Author)
Ohio State University (OSU) - Department of Accounting & Management Information Systems ( email )
2100 Neil Avenue
Columbus, OH 43210
United States
Jacob Thornock
University of Washington - Michael G. Foster School of Business ( email )
Box 353200
Seattle, WA 98195-3200
United States
HOME PAGE: http://faculty.washington.edu/thornocj/index.shtml
Braden Williams
University of Texas at Austin - Department of Accounting ( email )
Austin, TX 78712
United States
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