Does credit rating conservatism matter for corporate tax avoidance?

Tao Chen, Sidney Leung and Lingmin Xie

Accounting and Finance, 2021, vol. 61, issue 4, 5681-5730

Abstract: Using the passage of Dodd‐Frank and the US sovereign downgrade as quasi‐natural experiments, we examine the effect of credit rating conservatism on corporate tax avoidance. We find that treatment firms engage in more tax‐planning activities than control firms in both research settings. We further find that these effects are driven mainly by firms with large existing tax‐planning capacity, firms with decreased use of external financing, firm with more reliance on rating information, and firms with weak external monitoring using the large Dodd‐Frank sample. Overall, the findings provide evidence that credit rating conservatism plays a role in corporate tax‐avoidance decisions.

Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
https://doi.org/10.1111/acfi.12773

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bla:acctfi:v:61:y:2021:i:4:p:5681-5730

Ordering information: This journal article can be ordered from
http://www.blackwell ... bs.asp?ref=0810-5391

Access Statistics for this article

Accounting and Finance is currently edited by Robert Faff

More articles in Accounting and Finance from Accounting and Finance Association of Australia and New Zealand Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().