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The value relevance of taxes: International evidence on the proxy for profitability role of tax surprise

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  • Kerr, Jon N.

Abstract

Despite evidence that tax surprise is incrementally value relevant, the literature has done little to broaden the investigation beyond the United States or examine circumstances that affect informativeness. After extending to the international setting, I examine the impact of tax enforcement. I report strong results of greater value relevance when tax enforcement is high and that the value relevance of tax surprise is mostly contained within its interaction with tax enforcement. These findings highlight the importance of tax enforcement in determining the information content of tax surprise and suggest that extant and future discussions should be broadened to include it.

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  • Kerr, Jon N., 2019. "The value relevance of taxes: International evidence on the proxy for profitability role of tax surprise," Journal of Accounting and Economics, Elsevier, vol. 67(2), pages 297-305.
    • Handle: RePEc:eee:jaecon:v:67:y:2019:i:2:p:297-305
    DOI: 10.1016/j.jacceco.2018.10.001
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    2. Lee, Ye Ji, 2021. "The effects of analysts’ tax expense forecast accuracy on corporate tax avoidance: An international analysis," Journal of Contemporary Accounting and Economics, Elsevier, vol. 17(2).

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