ACCOUNTING CONSERVATISM AND CORPORATE TAX AVOIDANCE

Corporate Governance, Accounting Conservatism, and Manipulation

Prior studies have portrayed accounting conservatism as a tool that enables boards to perform their monitoring duties. We develop a model that suggests that the empirical association between conservatism and governance can also run in the opposite direction —only well-governed firms with suffi cient monitoring in place can fully utilize the benefits of conservative accounting. In our setting, c...

Does Accounting Conservatism Impede Corporate Innovation?

We examine the impact of accounting conservatism on corporate innovation. We find that firms with a higher level of accounting conservatism generate fewer patents and patent citations. They invest less in R&D activities but our results hold after controlling for this lower R&D activity. Moreover, the cash-flows associated with innovation in firms with more conservative accounting are lower and ...

Top Management Conservatism and Corporate Risk Strategies: Evidence from Managers' Personal Political Orientation and Corporate Tax Avoidance

TOP MANAGEMENT CONSERVATISM AND CORPORATE RISK STRATEGIES: EVIDENCE FROM MANAGERS’ PERSONAL POLITICAL ORIENTATION AND CORPORATE TAX AVOIDANCE DANE M. CHRISTENSEN,* DAN S. DHALIWAL,2,3 STEVEN BOIVIE,4 and SCOTT D. GRAFFIN5 1 Smeal College of Business, The Pennsylvania State University, University Park, Pennsylvania, U.S.A. 2 Eller College of Management, University of Arizona, Tucson, Arizona, U....

Externalities of Corporate Tax Avoidance

We show that when a meaningful proportion of firms in an economy engage in tax avoidance strategies, the covariance between a firm’s cash flow and the market cash flows increases, thereby increasing a firm’s cost of capital. This negative externality is imposed on all firms in the economy, not just tax-avoiding firms. The negative externality results regardless of the level of uncertainty assoc...

Tax Avoidance , Corporate Transparency , and Firm Value