The value relevance of corporate tax expenses in the presence of partisanship: International evidence

Parastoo Ostad and Javier Mella

Global Finance Journal, 2023, vol. 57, issue C

Abstract: This study examines the value relevance of corporate tax expenses in an international setting and determines whether partisanship plays a role in its informativeness. Our empirical results indicate the greater value relevance of corporate taxes during the administration of right-leaning governments. Moreover, our cross-sectional analysis suggests that corporate tax expense is value-relevant during the administration of right-leaning governments; however, corporate tax expense does not convey information regarding returns when left-leaning parties are in office. These findings highlight the importance of the political orientation of tax policymakers in determining value-related information on corporate tax expenses.

Keywords: Asset pricing; Political cycles; Corporate tax expenses; Value relevance; Stock market (search for similar items in EconPapers)
JEL-codes: F65 G12 G15 G18 H25 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:eee:glofin:v:57:y:2023:i:c:s1044028323000273

DOI: 10.1016/j.gfj.2023.100832

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