Date of this Version
Journal of Accounting and Economics
We use a proprietary data set with detailed executive compensation information to examine the relationship between the incentives of the tax director and GAAP and cash effective tax rates, the book-tax gap, and measures of tax aggressiveness. We find that the incentive compensation of the tax director exhibits a strong negative relationship with the GAAP effective tax rate, but little relationship with the other tax attributes. We interpret these results as indicating that tax directors are provided with incentives to reduce the level of tax expense reported in the financial statements.
© 2012. This manuscript version is made available under the CC-BY-NC-ND 4.0 license http://creativecommons.org/licenses/by-nc-nd/4.0/
tax director incentives, equity incentives, effective tax rate, book-tax difference
Armstrong, C. S., Blouin, J. L., & Larcker, D. F. (2012). The Incentives for Tax Planning. Journal of Accounting and Economics, 53 (1-2), 391-411. http://dx.doi.org/10.1016/j.jacceco.2011.04.001
Date Posted: 27 November 2017
This document has been peer reviewed.