The effects of analysts’ tax expense forecast accuracy on corporate tax avoidance: An international analysis

Ye Ji Lee

Journal of Contemporary Accounting and Economics, 2021, vol. 17, issue 2

Abstract: A spotlight has recently been cast on the role of analysts as monitors of corporate tax planning, but investigations beyond the US are rare. After extension to the international setting, I investigate whether the strength of investor protection impacts the relationship between analysts’ tax expense forecast accuracy and tax avoidance. Using a sample from 24 countries, I find that firms with high analysts’ tax expense forecast accuracy engage in lower levels of tax avoidance than firms with low forecast accuracy; this relationship is greater for firms in countries with weaker investor protection. These findings suggest that the extent of country-level investor protection substitutes for firm-level governance in constraining managerial incentives for tax avoidance.

Keywords: Analyst forecast accuracy; Effective tax rate; Investor protection; Managerial diversion; Tax avoidance; Tax expense (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jocaae:v:17:y:2021:i:2:s1815566921000011

DOI: 10.1016/j.jcae.2021.100243

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