Effective Tax Planning

• 成果类型: Article
• 署名作者: Schwab, Casey M.; Stomberg, Bridget; Williams, Brian M.
• 署名单位: University of North Texas System; University of North Texas Denton; Indiana University System; IU Kelley School of Business; Indiana University Bloomington
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2019-0020
• 发表日期: 2022
• 页码: 413-437
• 关键词: corporate; EFFICIENCY

摘要

We use data envelopment analysis (DEA) to develop a measure of effective tax planning that is theoretically aligned with the Scholes-Wolfson paradigm and captures how efficiently firms maximize after-tax returns given their operating, investing, and financing decisions. We then (1) document that the measure is associated with higher after-tax returns to provide assurance DEA achieves its objective in our setting, (2) demonstrate that the measure is incremental to cash ETRs in predicting after-tax returns, (3) validate the measure by showing its association with lower tax and non-tax costs, and (4) provide evidence that the measure captures something about taxes distinct from overall firm performance. This measure is useful to researchers given the known limitations of ETRs as a measure of tax planning.