Determinants and Consequences of Corporate Tax Avoidance
Gerrit M. Lietz
University of Muenster
I provide a first comprehensive literature survey with an exclusive focus on empirical corporate tax avoidance research. Shackelford and Shevlin  traced the earlier developments of archival, microeconomic-based, empirical income tax research, pointing out a nascent interest for research on the determinants of tax aggressiveness. Nine years later, Hanlon and Heitzman  labeled “corporate tax avoidance” as one of four “main areas” of tax research in accounting. Until and since then, work in this area has grown at a rapid pace and clearly remains a vibrant area of tax research. Hence, the goal of this study is to assist both researchers who are new to this field as well as experienced readers by providing an updated overview of empirical studies investigating firms’ efforts to reduce their explicit tax burden. In a first step, the origins of tax avoidance research in the corporate context are briefly summarized. The second section briefly reviews numerous fundamental firm characteristics (e.g. size, capital structure, and asset mix) that have been shown to explain some variation in levels of tax avoidance. Third, the main part of this study is devoted to the discussion of the extensive empirical findings on the determinants and consequences of corporate tax avoidance (e.g. various corporate governance arrangements and alternative firm value implications). Finally, the study concludes with suggestions for future research.
Number of Pages in PDF File: 65
Keywords: tax avoidance, tax planning, literature review
JEL Classification: H20, M40, G30
Date posted: December 6, 2013