How does quasi-indexer ownership affect corporate tax planning?

Shuping Chen, Ying Huang, Ningzhong Li and Terry Shevlin

Journal of Accounting and Economics, 2019, vol. 67, issue 2, 278-296

Abstract: We study whether, and more importantly, through what mechanisms, quasi-indexers affect portfolio firms’ tax planning by employing the discontinuity in quasi-indexer ownership around the Russell 1000/2000 index cutoff. Using a regression discontinuity design, we find that higher quasi-indexer ownership leads to greater tax saving. With respect to the mechanisms, we find that the greater tax saving is a result of a focus on improved overall firm performance, not a specific focus on improved tax planning. We further find that the documented tax saving effect is partially due to quasi-indexers’ influences on executive equity incentives, corporate governance, and information environment.

Keywords: Tax planning; Quasi-indexer; Russell index assignment; Regression discontinuity (search for similar items in EconPapers)
JEL-codes: G32 H26 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (32)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:67:y:2019:i:2:p:278-296

DOI: 10.1016/j.jacceco.2018.01.001

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