Navigating through cyberattacks: The role of tax aggressiveness

Anh-Tuan Le, Henry Hongren Huang and Trung Do

Journal of Corporate Finance, 2024, vol. 88, issue C

Abstract: This research investigates the impact of cyberattacks on tax aggressiveness using a difference-in-differences analysis with a matched sample. We find that firms experiencing cyberattacks are more likely to have lower cash effective tax rates and greater discretionary book-tax differences. We further show that cyberattacks have a greater impact on corporate tax aggressiveness when firms are more exposed to financial distress. Additional analyses show tax aggressiveness increases less when firms are in states with enactments of notification laws and firms with ex ante higher cybersecurity investment. Our aggregate results suggest that firms take more tax risky positions in response to greater financial distress and information asymmetry, which are attributed to the consequences of cyberattacks.

Keywords: Cyberattacks; Tax aggressiveness; Tax avoidance (search for similar items in EconPapers)
JEL-codes: G30 H20 K42 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:88:y:2024:i:c:s0929119924001111

DOI: 10.1016/j.jcorpfin.2024.102649

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