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Does Information Asymmetry Affect Corporate Tax Aggressiveness?

作者: 发布时间:2014-12-04 点击数:
主讲人: Tao (Jonas) Chen
主讲人简介:

Nanyang Business School, Nanyang Technological University

 

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讲座简介:
Abstract:
The paper investigates the effects of information asymmetry on corporate tax avoidance. Our baseline results indicate that analyst coverage reduces tax avoidance. Using a Difference-in-Differences approach based on two sources of exogenous changes in information asymmetry caused by broker closures and mergers, we find that firms engage in more tax avoidance activities after an exogenous drop in the number of analysts following the firm, compared to similar firms that do not experience such an exogenous drop in analyst coverage. The evidence therefore suggests a strong negative causal effect of analyst coverage on tax avoidance. We further find that the effects are mainly driven by the firms with smaller initial analyst coverage and more financial constraints. Moreover, the effects are more pronounced in the subset of firms with more information opacity and poorer corporate governance. We further discuss potential channels through which analysts affect tax avoidance: with less competition due to exogenous broker exits, the remaining analysts are producing less informative reports and issuing more biased forecasts. Overall, our paper offers novel evidence that information transparency plays an important role in corporate tax avoidance decisions, and with increased information opacity induced by exogenous drops in analyst coverage, firms are likely to avoid taxes more aggressively.
 
JEL classification: D82; G24; G32; G34; H26; M40
 
Keywords: Information asymmetry; Analyst coverage; Corporate tax avoidance; Natural experiment; Broker closures and mergers
 
时间:2014-12-04(星期四)16:30-18:00
地点:N303 经济楼/Economics Building
讲座语言:English
主办单位:WISE-SOE
承办单位:
期数:“WISE-SOE”2014秋季学期“高级经济学系列讲座”第十三讲(总第334讲)--金融领域
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