Internal Information Quality and State Tax Planning

Posted: 8 Jul 2021

See all articles by Stacie Kelley Laplante

Stacie Kelley Laplante

University of Wisconsin - Madison

Daniel Lynch

affiliation not provided to SSRN

Mary Vernon

University of Connecticut; University of Wisconsin - Madison

Date Written: July 2, 2021

Abstract

This study examines the association between internal information quality and state tax planning. Prior literature documents a positive association between internal information quality and summary measures of tax avoidance. However, we know little about specific forms of tax planning internal information quality facilitates. State tax planning is difficult because of the number of jurisdictions, variety of tax rules, variation of enforcement, and apportionment requirements. We find internal information quality facilitates state tax planning and is most important when firms face more restrictive state tax laws and for domestic firms relative to multinational firms with international income shifting opportunities. Our results provide a baseline of the economic effects of internal information quality on different forms of tax planning. Understanding internal information quality’s role in state tax planning is especially relevant as countries propose to modify international tax rules to mirror the state taxation format of a single entity system with apportionment.

Keywords: internal information, tax avoidance, tax planning, state tax, foreign tax, federal tax

JEL Classification: H26, H71, H72

Suggested Citation

Laplante, Stacie Kelley and Lynch, Daniel and Vernon, Mary, Internal Information Quality and State Tax Planning (July 2, 2021). Contemporary Accounting Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3881106

Stacie Kelley Laplante (Contact Author)

University of Wisconsin - Madison ( email )

975 University Avenue
Madison, WI 53706
United States
608-265-3494 (Phone)
608-265-3494 (Fax)

Daniel Lynch

affiliation not provided to SSRN

Mary Vernon

University of Connecticut ( email )

School of Business
Storrs, CT 06269-2041
United States

University of Wisconsin - Madison ( email )

Madison, WI
United States

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