Incentives for Tax Planning and Avoidance: Evidence from the field

Journal Article (Journal Article)

We analyze survey responses from nearly 600 corporate tax executives to investigate firms' incentives and disincentives for tax planning. While many researchers hypothesize that reputational concerns affect the degree to which managers engage in tax planning, this hypothesis is difficult to test with archival data. Our survey allows us to investigate reputational influences and, indeed, we find that reputational concerns are important-69 percent of executives rate reputation as important and the factor ranks second in order of importance among all factors explaining why firms do not adopt a potential tax planning strategy. We also find that financial accounting incentives play a role. For example, 84 percent of publicly traded firms respond that top management at their company cares at least as much about the GAAP ETR as they do about cash taxes paid and 57 percent of public firms say that increasing earnings per share is an important outcome from a tax planning strategy.

Full Text

Duke Authors

Cited Authors

  • Graham, JR; Hanlon, M; Shevlin, T; Shroff, N

Published Date

  • January 1, 2014

Published In

Volume / Issue

  • 89 / 3

Start / End Page

  • 991 - 1023

International Standard Serial Number (ISSN)

  • 0001-4826

Digital Object Identifier (DOI)

  • 10.2308/accr-50678

Citation Source

  • Scopus