Do tax-based proprietary costs discourage public listing?

• 成果类型: Article
• 署名作者: Yost, Benjamin P.
• 署名单位: Boston College
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2022.101553
• 发表日期: 2023
• 关键词: sarbanes-oxley act; PRIVATE EQUITY; FIN 48; FIRMS; avoidance; disclosure; Aggressiveness; CONSEQUENCES; incentives; decisions

摘要

This study investigates whether tax-based proprietary costs associated with being a public firm (i.e., costs resulting from increased visibility to the tax authority) discourage public listing. I exploit the introduction of a mandatory disclosure requirement (FIN 48) which generated a signal to the government regarding the uncertainty of public firms' tax po-sitions, allowing for more carefully targeted audits. I hypothesize and find evidence of an increased propensity to go private by public, tax aggressive firms following the enactment of the disclosure rule but prior to its adoption. Cross-sectionally, the effect is stronger among firms that are more sensitive to tax-based proprietary costs. Moreover, IPOs by tax aggressive firms exhibit a relative decline after FIN 48, consistent with the disclosure requirement deterring private, tax aggressive firms from going public. Overall, my findings suggest that mandatory disclosure rules imposing tax-based proprietary costs may discourage some firms from operating as public entities.(c) 2022 Elsevier B.V. All rights reserved.