When does tax avoidance result in tax uncertainty?

Journal Article (Journal Article)

We investigate the relation between tax avoidance and tax uncertainty, where tax uncertainty is the amount of unrecognized tax benefits recorded over the same time period as the tax avoidance. On average, we find that tax avoiders, i.e., firms with relatively low cash effective tax rates, bear significantly greater tax uncertainty than firms that have higher cash effective tax rates. We find that the relation between tax avoidance and tax uncertainty is stronger for firms with frequent patent filings and tax haven subsidiaries, proxies for intangible-related transfer pricing strategies. The findings have implications for several puzzling results in the literature.

Full Text

Duke Authors

Cited Authors

  • Dyreng, SD; Hanlon, M; Maydew, EL

Published Date

  • March 1, 2019

Published In

Volume / Issue

  • 94 / 2

Start / End Page

  • 179 - 203

International Standard Serial Number (ISSN)

  • 0001-4826

Digital Object Identifier (DOI)

  • 10.2308/accr-52198

Citation Source

  • Scopus