The Effect of Voluntary Clawback Adoptions on Corporate Tax Policy

• 成果类型: Article
• 署名作者: Kubick, Thomas R.; Omer, Thomas C.; Wiebe, Zac
• 署名单位: University of Nebraska System; University of Nebraska Lincoln; University of Arkansas System; University of Arkansas Fayetteville
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-52484
• 发表日期: 2020
• 页码: 259-285
• 关键词: earnings management; executive-compensation; valuation allowance; avoidance; incentives; PROVISIONS; determinants; Aggressiveness; disclosure; INVESTMENT

摘要

Companies are adopting executive compensation recoupment (clawback) policies to discourage aggressive financial reporting choices. Recent research suggests clawback policies encourage other means of meeting earnings expectations. We suggest that reducing income tax expense is a means of meeting earnings expectations. We find that effective tax rates are lower after clawback adoption due to increased investments in tax planning. We identify three tax planning activities that clawback companies invest in to lower effective tax rates: purchases of auditor-provided tax services, increased connections to other low-tax companies, and use of tax havens. We provide evidence that effective tax rate decreases do not result from use of opportunistic income tax accruals, and that decreases are stronger among companies that adopt robust clawback policies. Additional tests indicate lower tax outcome volatility and longer, more readable tax footnotes following clawback adoption. Our results suggest a positive spillover effect of clawback adoption on corporate tax policy.