A Unifying Model of How the Tax System and Generally Accepted Accounting Principles Affect Corporate Behavior

46 Pages Posted: 31 Jan 2007 Last revised: 6 Mar 2022

See all articles by Douglas A. Shackelford

Douglas A. Shackelford

University of North Carolina Kenan-Flagler Business School; National Bureau of Economic Research (NBER)

Joel B. Slemrod

University of Michigan, Stephen M. Ross School of Business; National Bureau of Economic Research (NBER)

James Sallee

University of Michigan at Ann Arbor

Multiple version iconThere are 2 versions of this paper

Date Written: January 2007

Abstract

This paper models the impact of the tax system and GAAP on the real and financial reporting decisions of corporations. It provides a first step toward joint evaluation of taxation and financial reporting in the standard economic analyses of corporate behavior. The key finding is that value arises from real decisions that provide firms with discretion in their tax and financial reporting. This desire for flexibility modifies the optimal decisions of firms, in theory, and we provide examples that illustrate this behavior in the real world.

Suggested Citation

Shackelford, Douglas A. and Slemrod, Joel B. and Sallee, James, A Unifying Model of How the Tax System and Generally Accepted Accounting Principles Affect Corporate Behavior (January 2007). NBER Working Paper No. w12873, Available at SSRN: https://ssrn.com/abstract=960448

Douglas A. Shackelford (Contact Author)

University of North Carolina Kenan-Flagler Business School ( email )

Kenan-Flagler Business School
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United States
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National Bureau of Economic Research (NBER)

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Joel B. Slemrod

University of Michigan, Stephen M. Ross School of Business ( email )

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National Bureau of Economic Research (NBER) ( email )

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James Sallee

University of Michigan at Ann Arbor ( email )

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Ann Arbor, MI 48109
United States

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