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The incentives for tax planning

  • Armstrong, Christopher S.
  • Blouin, Jennifer L.
  • Larcker, David F.
Registered author(s):

    We use a proprietary data set with detailed executive compensation information to examine the relationship between the incentives of the tax director and GAAP and cash effective tax rates, the book-tax gap, and measures of tax aggressiveness. We find that the incentive compensation of the tax director exhibits a strong negative relationship with the GAAP effective tax rate, but little relationship with the other tax attributes. We interpret these results as indicating that tax directors are provided with incentives to reduce the level of tax expense reported in the financial statements.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0165410111000371
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    Article provided by Elsevier in its journal Journal of Accounting and Economics.

    Volume (Year): 53 (2012)
    Issue (Month): 1 ()
    Pages: 391-411

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    Handle: RePEc:eee:jaecon:v:53:y:2012:i:1:p:391-411
    DOI: 10.1016/j.jacceco.2011.04.001
    Contact details of provider: Web page: http://www.elsevier.com/locate/jae

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