Quotation Bornemann, Tobias. 2018. Accounting Conservatism and Tax Avoidance.


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Abstract

This study analyzes the relation between accounting conservatism, future tax rate cuts and countries’ level of book-tax conformity. Firms have an incentive to increase conservatism in financial reporting when a tax rate cut is imminent to shift taxable income into the lower taxed future. Using a panel of firms across 18 countries from 1995 to 2010 I find that conditional conservatism is positively and significantly associated with future tax rate cuts when book-tax conformity is high. This effect is particularly pronounced for firms that concentrate the majority of their operations in the country in which the tax rate is cut. In contrast, there is no significant relation between future tax rate cuts and unconditional conservatism.

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Publication's profile

Status of publication Published
Affiliation WU
Type of publication Working/discussion paper, preprint
Language English
Title Accounting Conservatism and Tax Avoidance
Year 2018
URL https://ssrn.com/abstract=3114054

Associations

People
Bornemann, Tobias (Details)
Organization
Business Taxation Group AB (Details)
Research areas (ÖSTAT Classification 'Statistik Austria')
5300 Economics (Details)
5349 Business taxation (Details)
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