The Influence of Internal Tax Resources on Observable Corporate Tax Outcomes KimHonaker (DBA Graduate), Divesh S. Sharma (Committee Chair), Marshall A. Geiger (Committee Member) and Jennifer K. Schafer (Reader)
U.S. corporations’ tax saving strategies generate regulator, public market, and the media scrutiny and motivate accounting research on corporate tax outcomes. Although resources such as the internal tax department (ITD) and the senior tax executive (STE) are instrumental in corporate taxation, extant research has not considered these factors due to data limitations. After developing a unique database, we examine how an ITD and characteristics of the STE are associated with two observable tax outcomes: avoidance and aggressiveness. We measure avoidance using book effective tax rates (ETRs) and measure aggressiveness using uncertain tax benefits (UTBs). First, we find ITDs are associated with lower book ETRs and higher UTBs. Second, we find STEs with international tax experience or longer tenure are associated with lower book ETRs and higher UTBs, and STEs who are alumni of external auditors are associated with lower book ETRs but not with UTBs. Third, we find external auditors can dampen the ITD’s influence on both of these outcomes through the provision of auditor-provided tax services (APTS). Finally, we find audit committee legal and tax experts impose some level of conservatism on tax outcomes, while Chief Financial Officers (CFOs) with a tax background are associated with more tax aggressiveness. Overview
10 | DBA Summary
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