Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments April 3, 2023 erstellt
Description:
We assert that research investigating the effect of tax avoidance on an economic outcome is always interested in the consequences of intentional, deliberate actions aimed at reducing taxable income. Therefore, when examining the consequences of tax avoidance, it is crucial to distinguish between avoidance that is intentional or deliberate in nature relative to avoidance that arises from incidental factors. However, many common tax avoidance proxies, such as effective tax rates, have been shown to capture both intentional and incidental forms of tax avoidance. Thus, we examine how failure to adequately separate and isolate these two forms of tax avoidance from each other can create endogeneity, which can lead to incomplete and incorrect economic inferences. We consider two potential solutions to this endogeneity problem and illustrate these solutions by reexamining two influential studies that investigate the consequences of tax avoidance. We show how controlling for past accounting losses completely eliminates the effect of tax avoidance on credit spreads (Hasan et al. 2014) and using an instrumental variables approach changes the sign of the relation between tax sheltering and stock price crash risk (Kim et al. 2011). Our findings highlight the importance of recognizing incidental and intentional tax planning as distinct and independent components of tax avoidance