Investment Opportunity Sets, Operating Uncertainty, and Capital Market Pressure: Determinants of Investments in Tax Shelter Activities?
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
July 18, 2012
2012 AAA Annual Meeting - Tax Concurrent Sessions
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.
Date posted: July 18, 2012 ; Last revised: July 24, 2013