Do Firms Engage in Aggressive Tax Reporting Prior to Bankruptcy?

Accounting & Taxation, v. 7 (2) p. 1-15

15 Pages Posted: 28 Jan 2016

See all articles by Wendy Heltzer

Wendy Heltzer

DePaul University - College of Commerce

Mary Mindak

DePaul University

Mingjun Zhou

DePaul University

Date Written: 2015

Abstract

Our study examines the tax reporting behaviors of firms just before they file for bankruptcy (“prebankruptcy firms”). Specifically, we investigate whether pre-bankruptcy firms engage in more aggressive tax reporting, in comparison to non-bankruptcy firms. We also investigate whether the relationship between aggressive financial reporting and aggressive tax reporting is different across pre-bankruptcy and non-bankruptcy firms. Our findings suggest that pre-bankruptcy firms engage in more aggressive tax reporting, vis-à-vis non-bankruptcy firms. Additionally, we find that the positive relation between aggressive book reporting and aggressive tax reporting is stronger among pre-bankruptcy firms, vis-à-vis firms that are not approaching bankruptcy. Thus, our findings not only further our understanding of the motivations behind these significant reporting decisions, but also help us understand how a growing proportion of corporate managers respond to increasing pressures to perform in a depressed economy.

Keywords: Tax Reporting, Bankruptcy, Aggressive Reporting

JEL Classification: M400, M410, M480

Suggested Citation

Heltzer, Wendy and Mindak, Mary and Zhou, Mingjun, Do Firms Engage in Aggressive Tax Reporting Prior to Bankruptcy? (2015). Accounting & Taxation, v. 7 (2) p. 1-15, Available at SSRN: https://ssrn.com/abstract=2668814

Wendy Heltzer (Contact Author)

DePaul University - College of Commerce ( email )

Chicago, IL
United States

Mary Mindak

DePaul University ( email )

1 East Jackson Blvd.
Chicago, IL 60604
United States

Mingjun Zhou

DePaul University ( email )

1 East Jackson Blvd.
Chicago, IL 60604
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
80
Abstract Views
1,317
rank
383,332
PlumX Metrics