Details
| Original language | English |
|---|---|
| Journal | Journal of Accounting, Auditing and Finance |
| Publication status | E-pub ahead of print - 9 Oct 2023 |
Abstract
We use a sample of 248 tax strategies published by U.K. companies listed on the Financial Times Stock Exchange (FTSE) 100 and FTSE 250 to examine (a) how companies present themselves—more as “responsible taxpayers” who view taxes as a meaningful contribution to society, or more as “tax planners” who view taxes primarily as a cost, and (b) whether these presentations correspond to actual tax avoidance behavior. Our results show that, on average, firms tend to portray themselves as “responsible taxpayers,” but that this portrayal is consistent with firms’ tax avoidance behavior only when firms are subject to above-average external monitoring by financial analysts. The results suggest that firms manage the content of qualitative tax disclosures to sway public opinion as long as the probability of detecting misstatements is sufficiently low. This raises doubts as to whether mandatory qualitative information provides added value for stakeholders if it is not under external review. JEL Classification: H25; H20; M40; M48.
Keywords
- external monitoring, strategic reporting, tax disclosure, tax transparency
ASJC Scopus subject areas
- Business, Management and Accounting(all)
- Accounting
- Economics, Econometrics and Finance(all)
- Finance
- Economics, Econometrics and Finance(all)
- Economics, Econometrics and Finance (miscellaneous)
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In: Journal of Accounting, Auditing and Finance, 09.10.2023.
Research output: Contribution to journal › Article › Research › peer review
}
TY - JOUR
T1 - Public Disclosure of Tax Strategies and Firm’s Actual Tax Policy
AU - Blaufus, Kay
AU - Jarzembski, Janine K.
AU - Reineke, Jakob
AU - Trenn, Ilko
PY - 2023/10/9
Y1 - 2023/10/9
N2 - We use a sample of 248 tax strategies published by U.K. companies listed on the Financial Times Stock Exchange (FTSE) 100 and FTSE 250 to examine (a) how companies present themselves—more as “responsible taxpayers” who view taxes as a meaningful contribution to society, or more as “tax planners” who view taxes primarily as a cost, and (b) whether these presentations correspond to actual tax avoidance behavior. Our results show that, on average, firms tend to portray themselves as “responsible taxpayers,” but that this portrayal is consistent with firms’ tax avoidance behavior only when firms are subject to above-average external monitoring by financial analysts. The results suggest that firms manage the content of qualitative tax disclosures to sway public opinion as long as the probability of detecting misstatements is sufficiently low. This raises doubts as to whether mandatory qualitative information provides added value for stakeholders if it is not under external review. JEL Classification: H25; H20; M40; M48.
AB - We use a sample of 248 tax strategies published by U.K. companies listed on the Financial Times Stock Exchange (FTSE) 100 and FTSE 250 to examine (a) how companies present themselves—more as “responsible taxpayers” who view taxes as a meaningful contribution to society, or more as “tax planners” who view taxes primarily as a cost, and (b) whether these presentations correspond to actual tax avoidance behavior. Our results show that, on average, firms tend to portray themselves as “responsible taxpayers,” but that this portrayal is consistent with firms’ tax avoidance behavior only when firms are subject to above-average external monitoring by financial analysts. The results suggest that firms manage the content of qualitative tax disclosures to sway public opinion as long as the probability of detecting misstatements is sufficiently low. This raises doubts as to whether mandatory qualitative information provides added value for stakeholders if it is not under external review. JEL Classification: H25; H20; M40; M48.
KW - external monitoring
KW - strategic reporting
KW - tax disclosure
KW - tax transparency
UR - http://www.scopus.com/inward/record.url?scp=85173940517&partnerID=8YFLogxK
U2 - 10.1177/0148558X231200913
DO - 10.1177/0148558X231200913
M3 - Article
AN - SCOPUS:85173940517
JO - Journal of Accounting, Auditing and Finance
JF - Journal of Accounting, Auditing and Finance
SN - 0148-558X
ER -