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Increased Tax Disclosures and Corporate Tax Avoidance

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  • Erin Henry
  • Norman Massel
  • Erin Towery

Abstract

This paper examines whether three recent mandatory tax disclosure regimes (Schedule M-3, FIN 48, and Schedule UTP) are associated with long-term changes in corporate tax avoidance. We find that both the Schedule M-3 and Schedule UTP disclosure regimes are associated with increased levels of tax avoidance while the FIN 48 disclosure regime is associated with decreased levels of tax avoidance. We also posit that these associations could differ for domestic and multinational firms because of the specific information required within each disclosure. We find that the increased tax avoidance associated with Schedule M-3 and Schedule UTP is stronger for domestic firms than for multinational firms. The decreased tax avoidance associated with FIN 48 is also stronger for domestic firms than for multinational firms.

Suggested Citation

  • Erin Henry & Norman Massel & Erin Towery, 2016. "Increased Tax Disclosures and Corporate Tax Avoidance," National Tax Journal, National Tax Association;National Tax Journal, vol. 69(4), pages 809-830, December.
    • Handle: RePEc:ntj:journl:v:69:y:2016:i:4:p:809-830
    DOI: 10.17310/ntj.2016.4.04
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    Cited by:

    1. Katarzyna Anna Bilicka & Elisa Casi & Carol Seregni & Barbara Stage, 2021. "Tax Strategy Disclosure: A Greenwashing Mandate?," CESifo Working Paper Series 9030, CESifo.
    2. Borkowski, Susan C. & Gaffney, Mary Anne, 2021. "FIN 48 and the tax aggressive behaviors of transnational corporations: A decade later," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 42(C).
    3. Jiang Cheng & Travis Chow & Tzu‐Ting Lin & Jeffrey Ng, 2022. "The effect of accounting for income tax uncertainty on tax‐deductible loss accruals for private insurers," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 89(2), pages 505-544, June.
    4. Feldman, Naomi & Kawano, Laura & Patel, Elena & Rao, Nirupama & Stevens, Michael & Edgerton, Jesse, 2021. "Investment differences between public and private firms: Evidence from U.S. tax returns," Journal of Public Economics, Elsevier, vol. 196(C).
    5. D.A. Artemenko & L.A.Aguzarova & F.S.Aguzarova & E.V. Porollo, 2017. "Causes of Tax Risks and Ways to Reduce Them," European Research Studies Journal, European Research Studies Journal, vol. 0(3B), pages 453-459.
    6. Müller, Raphael & Spengel, Christoph & Vay, Heiko, 2020. "On the determinants and effects of corporate tax transparency: Review of an emerging literature," ZEW Discussion Papers 20-063, ZEW - Leibniz Centre for European Economic Research.
    7. repec:ces:ifowps:_2020 is not listed on IDEAS
    8. Konda, Laura & Patel, Elena & Seegert, Nathan, 2022. "Tax enforcement and the intended and unintended consequences of information disclosure," Journal of Public Economics, Elsevier, vol. 212(C).
    9. Preetika Joshi & Edmund Outslay & Anh Persson & Terry Shevlin & Aruhn Venkat, 2020. "Does Public Country‐by‐Country Reporting Deter Tax Avoidance and Income Shifting? Evidence from the European Banking Industry," Contemporary Accounting Research, John Wiley & Sons, vol. 37(4), pages 2357-2397, December.
    10. Yost, Benjamin P., 2023. "Do tax-based proprietary costs discourage public listing?," Journal of Accounting and Economics, Elsevier, vol. 75(2).

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