Accounting Papers

Document Type

Journal Article

Date of this Version

2012

Publication Source

Journal of Accounting and Economics

Volume

53

Issue

1-2

Start Page

391

Last Page

411

DOI

10.1016/j.jacceco.2011.04.001

Abstract

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.

Copyright/Permission Statement

© 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/

Keywords

tax director incentives, equity incentives, effective tax rate, book-tax difference

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Date Posted: 27 November 2017

This document has been peer reviewed.