Do IRS Audits Deter Corporate Tax Avoidance?

• 成果类型: Article
• 署名作者: Hoopes, Jeffrey L.; Mescall, Devan; Pittman, Jeffrey A.
• 署名单位: University of Michigan System; University of Michigan; University of Saskatchewan; Memorial University Newfoundland
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/accr-50187
• 发表日期: 2012
• 页码: 1603-1639
• 关键词: institutional investors; earnings; FIRMS; income; Aggressiveness; governance; management; ECONOMICS; shelters; location

摘要

We extend research on the determinants of corporate tax avoidance to include the role of Internal Revenue Service (IRS) monitoring. Our evidence from large samples implies that U.S. public firms undertake less aggressive tax positions when tax enforcement is stricter. Reflecting its first-order economic impact on firms, our coefficient estimates imply that raising the probability of an IRS audit from 19 percent (the 25th percentile in our data) to 37 percent (the 75th percentile) increases their cash effective tax rates, on average, by nearly two percentage points, which amounts to a 7 percent increase in cash effective tax rates. These results are robust to controlling for firm size and time, which determine our primary proxy for IRS enforcement, in different ways; specifying several alternative dependent and test variables; and confronting potential endogeneity with instrumental variables and panel data estimations, among other techniques.