Investment Opportunity Sets, Operating Uncertainty, and Capital Market Pressure: Determinants of Investments in Tax Shelter Activities?

2012 AAA Annual Meeting - Tax Concurrent Sessions

Posted: 18 Jul 2012 Last revised: 24 Jul 2013

Sean T. McGuire

Texas A&M University - Department of Accounting

Thomas C. Omer

University of Nebraska at Lincoln - School of Accountancy

Jaron H. Wilde

University of Iowa - Henry B. Tippie College of Business

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Date Written: July 18, 2012

Abstract

This study examines whether factors that influence firms’ overall investment strategies also influence the decision to invest in a tax shelter. Our results suggest that firms with large investment opportunity sets are less likely to invest in tax shelters. We also find that firms with greater operating uncertainty are less likely to invest in tax shelters. Finally, we find that firms with greater capital market pressure are more likely to invest in tax sheltering activities. In combination, our evidence suggests that the likelihood that a firm will invest in tax sheltering activities is a function of its overall investment strategy.

Suggested Citation

McGuire, Sean T. and Omer, Thomas C. and Wilde, Jaron H., Investment Opportunity Sets, Operating Uncertainty, and Capital Market Pressure: Determinants of Investments in Tax Shelter Activities? (July 18, 2012). 2012 AAA Annual Meeting - Tax Concurrent Sessions. Available at SSRN: https://ssrn.com/abstract=2112366 or http://dx.doi.org/10.2139/ssrn.2112366

Sean T. McGuire

Texas A&M University - Department of Accounting ( email )

430 Wehner
College Station, TX 77843-4353
United States

Thomas C. Omer

University of Nebraska at Lincoln - School of Accountancy ( email )

307 College of Business Administration
Lincoln, NE 68588-0488
United States

Jaron H. Wilde (Contact Author)

University of Iowa - Henry B. Tippie College of Business ( email )

Acquisitions
5020 Main Library
Iowa City, IA 52242-1000
United States

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