Tax Strategies: It's Not Just About Minimization

41 Pages Posted: 21 Feb 2016

See all articles by Stevanie S. Neuman

Stevanie S. Neuman

University of Missouri at Columbia - School of Accountancy

Date Written: February 19, 2016


By focusing on tax avoidance, prior research implicitly assumes that all firms’ tax strategies emphasize tax minimization. However, the large percentage of firms paying relatively high taxes have prompted questions regarding why all firms cannot or do not minimize taxes. I investigate this question by identifying an alternative approach to tax strategy, sustainability, and examining how firms implement tax strategies, as well as whether tax strategy choice has implications for firm value. I find numerous differences in firm and auditor characteristics associated with sustainable and minimization tax strategies. Moreover, additional analyses suggest that these differences are consistent with managers making a conscious decision to implement a specific tax strategy. I also find that firms implementing sustainable tax strategies earn significantly higher median buy-and-hold returns than firms implementing minimization tax strategies, suggesting that minimization may not be the only method of tax planning that maximizes value.

Keywords: sustainable tax strategies, minimization tax strategies, firm value

JEL Classification: M40, M41, M49

Suggested Citation

Neuman, Stevanie S., Tax Strategies: It's Not Just About Minimization (February 19, 2016). Available at SSRN: or

Stevanie S. Neuman (Contact Author)

University of Missouri at Columbia - School of Accountancy ( email )

College of Business
Columbia, MO 65211
United States

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