Cost behavior around corporate tax rate cuts
Henrik Höglund and
Journal of International Accounting, Auditing and Taxation, 2019, vol. 34, issue C, 1-11
In this study, we investigate cost behavior of companies in Organisation for Economic Co-operation and Development (OECD) member countries before corporate tax rate cuts become effective. We consider such events to generate strong incentives for intertemporal cost shifting. We analyze the time period between 2011 and 2016, which includes 32 tax reductions. The results show that companies exhibit income-decreasing selling, general, and administrative cost behavior before tax rate cuts, and that the extent is proportional to the magnitude of the decrease in the tax rate. Furthermore, we find stronger evidence of this form of tax-induced earnings management in lower tax compliance and code law countries, as well as for private companies.
Keywords: Cost behavior; Earnings management; Tax incentive; Tax reform (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Full text for ScienceDirect subscribers only
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:eee:jiaata:v:34:y:2019:i:c:p:1-11
Access Statistics for this article
Journal of International Accounting, Auditing and Taxation is currently edited by R. Larson
More articles in Journal of International Accounting, Auditing and Taxation from Elsevier
Bibliographic data for series maintained by Haili He ().