The effect of tax avoidance crackdown on corporate innovation

• 成果类型: Article
• 署名作者: Li, Qin; Ma, Mark (Shuai); Shevlin, Terry
• 署名单位: Hong Kong Polytechnic University; Pennsylvania Commonwealth System of Higher Education (PCSHE); University of Pittsburgh; University of California System; University of California Irvine
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2020.101382
• 发表日期: 2021
• 关键词: Financial constraints; INVESTMENT; income; debt; benefits; state; cost

摘要

To constrain the use of intangible assets in tax-motivated state income shifting, many U.S. state governments adopted addback statutes. Addback statutes reduce the tax benefits that firms can gain from creating intangible assets such as patents. Using a sample of U.S. public firms, we examine the effect of addback statutes on corporate innovation behavior. First, the adoption of addback statutes leads to a 4.77 percentage point decrease in the number of patents and a 5.12 percentage point decrease in the number of patent citations. Second, the ?disappearing patents? resulting from addback statutes have significant economic value. Third, after a state adopts an addback statute, a firm with material subsidiaries in that state assigns fewer patents to subsidiaries in zero-tax states, whereas the number of patents assigned to the other states does not change. Overall, our findings suggest that addback statutes impede corporate innovation. 0 2020 Elsevier B.V. All rights reserved.