The Impact of Cryptocurrency Exposure on Corporate Tax Avoidance Among US Listed Companies

Junnan Cui, Li Gao () and Yufei Wang
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Junnan Cui: Department of Accounting and Business Information Systems, Illinois State University, Normal, IL 61761, USA
Li Gao: School of Business, State University of New York at New Paltz, New Paltz, NY 12561, USA
Yufei Wang: LeBow College of Business, Drexel University, Philadelphia, PA 19104, USA

JRFM, 2024, vol. 17, issue 11, 1-18

Abstract: This study examined the association between corporate cryptocurrency activities and tax avoidance outcomes, utilizing data from US public firms covering the period from 2015 to 2023. Financial data were sourced from Compustat, while details regarding cryptocurrency activities were manually extracted from 10-K and 10-Q filings. Our analysis employed a fixed-effects regression model to examine the impact of these activities on cash effective tax rates (ETR). The findings indicate that firms engaged in cryptocurrency activities tend to have a lower ETR compared with those without such involvement. Notably, this effect was predominantly observed in companies directly engaged in cryptocurrency activities, such as accepting cryptocurrency as a payment method or actively trading cryptocurrency on an exchange platform. In contrast, firms involved in crypto mining or initial coin offerings did not exhibit a similar association. Our findings offer significant regulatory insights for governance bodies concerned with the implications of corporate cryptocurrency activities on tax strategies.

Keywords: cryptocurrency; effective tax rate; tax avoidance; ETR (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2024
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