Do experts help firms optimise?

James Mahon and Eric Zwick ()
Additional contact information
Eric Zwick: Chicago Booth and NBER

No 1532, Working Papers from Oxford University Centre for Business Taxation

Abstract: We study the role of paid preparers in the take-up of a tax refund for corporate losses, a provision of the U.S. tax code that made $357 billion available to eligible firms between 1998 and 2011. Drawing a sample of 1.2 million observations from the population of corporate tax returns, we present three findings. First, only 37 percent of eligible firms claim their refund. Second, a cost-benefit analysis of the tax loss choice cannot explain the low take-up rate. Third, firms with sophisticated preparers, such as licensed accountants, are more likely to claim the refund. Moving from the 10th to 90th percentile in a predicted preparer effect based on observables would increase take-up by 9.4 percentage points. To show that firm selection cannot explain the observed preparer effect, we validate this result with a research design based on preparer deaths and relocations. Our results reject the standard view that firms optimize perfectly with respect to taxes.

Date: 2015
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.sbs.ox.ac.uk/sites/default/files/Busine ... series-15/WP1532.pdf (application/pdf)
Our link check indicates that this URL is bad, the error code is: 404 Not Found (http://www.sbs.ox.ac.uk/sites/default/files/Business_Taxation/Docs/Publications/Working_Papers/series-15/WP1532.pdf [301 Moved Permanently]--> https://www.sbs.ox.ac.uk/sites/default/files/Business_Taxation/Docs/Publications/Working_Papers/series-15/WP1532.pdf)

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:btx:wpaper:1532

Access Statistics for this paper

More papers in Working Papers from Oxford University Centre for Business Taxation Contact information at EDIRC.
Bibliographic data for series maintained by Dongxian Guo ( this e-mail address is bad, please contact ).