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Navigating through cyberattacks: The role of tax aggressiveness

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  • Le, Anh-Tuan
  • Huang, Henry Hongren
  • Do, Trung K.

Abstract

This research investigates the impact of cyberattacks on tax aggressiveness using a difference-in-differences analysis with a matched sample. We find that firms experiencing cyberattacks are more likely to have lower cash effective tax rates and greater discretionary book-tax differences. We further show that cyberattacks have a greater impact on corporate tax aggressiveness when firms are more exposed to financial distress. Additional analyses show tax aggressiveness increases less when firms are in states with enactments of notification laws and firms with ex ante higher cybersecurity investment. Our aggregate results suggest that firms take more tax risky positions in response to greater financial distress and information asymmetry, which are attributed to the consequences of cyberattacks.

Suggested Citation

  • Le, Anh-Tuan & Huang, Henry Hongren & Do, Trung K., 2024. "Navigating through cyberattacks: The role of tax aggressiveness," Journal of Corporate Finance, Elsevier, vol. 88(C).
    • Handle: RePEc:eee:corfin:v:88:y:2024:i:c:s0929119924001111
    DOI: 10.1016/j.jcorpfin.2024.102649
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    More about this item

    Keywords

    Cyberattacks; Tax aggressiveness; Tax avoidance;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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