The incentives for tax planning

Christopher S. Armstrong, Jennifer L. Blouin and David F. Larcker

Journal of Accounting and Economics, 2012, vol. 53, issue 1, 391-411

Abstract: We use a proprietary data set with detailed executive compensation information to examine the relationship between the incentives of the tax director and GAAP and cash effective tax rates, the book-tax gap, and measures of tax aggressiveness. We find that the incentive compensation of the tax director exhibits a strong negative relationship with the GAAP effective tax rate, but little relationship with the other tax attributes. We interpret these results as indicating that tax directors are provided with incentives to reduce the level of tax expense reported in the financial statements.

Keywords: Tax director incentives; Equity incentives; Effective tax rate; Book-tax difference (search for similar items in EconPapers)
JEL-codes: H25 M41 M52 (search for similar items in EconPapers)
Date: 2012
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (175)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:53:y:2012:i:1:p:391-411

DOI: 10.1016/j.jacceco.2011.04.001

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