Abstract

http://ssrn.com/abstract=2408236
 


 



Overconfidence and Aggressive Corporate Tax Policy


James Chyz


University of Tennessee

Fabio B. Gaertner


University of Wisconsin - Madison - Department of Accounting and Information Systems

Asad Kausar


Nanyang Technological University (NTU)

Luke Watson


University of Florida - Fisher School of Accounting

September 15, 2014


Abstract:     
We investigate whether firms with overconfident CEOs pursue more aggressive tax positions and yet assign high expectations of their final realizability, even if these positions were to be audited by a relevant taxing authority. In our empirical tests we first document positive associations between proxies for the aggressiveness of firmsā€™ tax positions and overconfidence. We then test for associations between overconfidence and the financial reporting of uncertain tax benefits under FIN 48. Prior tax aggressiveness research leads to the expectation of a similarly positive association with uncertain tax benefits. Instead, we find that the same group of firms with overconfident CEOs report lower uncertain tax benefits in the financial statements. This asymmetric result between tax policy choices and the financial reporting of those choices by firms with overconfident CEOs should be of interest to policy and rule makers, thus advancing the overconfidence, tax aggressiveness, and financial reporting literatures.

Number of Pages in PDF File: 49

Keywords: Overconfidence, Tax aggressiveness, FIN48

JEL Classification: D80, M40, H25

working papers series





Download This Paper

Date posted: March 14, 2014 ; Last revised: November 23, 2014

Suggested Citation

Chyz, James and Gaertner, Fabio B. and Kausar, Asad and Watson, Luke, Overconfidence and Aggressive Corporate Tax Policy (September 15, 2014). Available at SSRN: http://ssrn.com/abstract=2408236 or http://dx.doi.org/10.2139/ssrn.2408236

Contact Information

James Chyz (Contact Author)
University of Tennessee ( email )
Knoxville, TN
United States
865-974-1701 (Phone)
Fabio B. Gaertner
University of Wisconsin - Madison - Department of Accounting and Information Systems ( email )
School of Business
975 University Avenue
Madison, WI 53706
United States
Asad Kausar
Nanyang Technological University (NTU) ( email )
S3 B2-A28 Nanyang Avenue
Singapore, 639798
Singapore
Luke Watson
University of Florida - Fisher School of Accounting ( email )
Warrington College of Business
PO Box 117166
Gainesville, FL 32611-7166
United States
352-273-0208 (Phone)
Feedback to SSRN


Paper statistics
Abstract Views: 612
Downloads: 223
Download Rank: 81,789

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo2 in 0.641 seconds