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Prior research provides evidence that, when searching for information to resolve client issues, tax professionals’ search processes are subject to confirmation bias. That is, their search tends to focus on information consistent with client preferences at the expense of attending to information that is contrary to client preferences. Although tax professionals are client advocates, such confirmation bias in information search is problematic because it may lead to systematic upward bias in assessments of the evidential support for client-preferred positions and to overly aggressive recommendations. In addition to their clients, tax staff professionals are also accountable to their supervisors. Therefore, this study investigates whether staff professionals’ confirmation bias in information search is influenced by their supervisor's initial belief concerning whether the client-preferred tax position can or cannot be supported. We predict that confirmation bias will be stronger when the supervisor's belief is consistent with client preference than when it is not. We report the results of an experiment in which 83 experienced tax professionals performed a simulated research task. We manipulated the client's preferred tax position and the supervisor's initial belief in a 2×2 between-subjects design. Our results generally support our hypotheses in a case in which the client recognized a loss. However, when the client recognized a gain, the results do not support our hypotheses. We also find that measures of confirmation bias are positively associated with subordinates’ assessments of the evidential support for the client-preferred position and that evidential support assessments are positively associated with the strength of recommendations for the client-preferred position.

The purpose of this paper is to revisit the ordered probit model of Hausman et al. after the NYSE decimalization.

The changed ordered probit model.

The model can somewhat capture the different impact of trading-related “explanatory” variables on price changes among three different decimals but does not explain much about price discreteness and irregular transaction intervals among the existing models of stock price discreteness. Overall 1/16th and 1/24th range of the dependent variable is better explained by trading-related explanatory variables than 1/8th range of the dependent variable for small firms and there is not much difference in large firms among three decimals. The results imply that finer specification in decimalization and smaller firm size matters in trading after the decimalization project.

First paper to revisit the ordered probit model of Hausman et al. after the NYSE decimalization.

This study seeks to further an understanding of taxpayer characteristics. The study presents a multidimensional tax locus of control (LOC) instrument developed from the starting point of a validated LOC instrument from the health-care field. Data collected using the instrument indicate that older taxpayers are more likely to have an external LOC in tax situations, indicated by a greater propensity to defer decision-making to a tax professional, defined as a “powerful other.” As the U.S. population is aging, this information may be helpful to tax practitioners when advising older clients on tax issues and researchers exploring issues related to aging. An additional finding is that taxpayers with more business exposure are less likely to defer to a tax professional. Gender and education play roles in an individual's internal tax LOC (TaxLOC) beliefs.

This study aims to investigate the moderating effect of equity-based compensation on the sources of book-tax differences. The authors investigate whether equity-based compensation affects the association between book-tax differences and tax planning, and the association between book-tax differences and earnings management.

The authors use a sample of 9,024 firm-year observations (913 firms) spanning the period 1992-2011, obtained from ExecuComp and Compustat. They estimate cross-sectional regressions of the proxy for tax planning, discretionary accruals and their interactions with equity-based compensation on book-tax differences.

The authors find that tax planning-related book-tax differences increase as the equity-based pay of executives does, and that earnings management-related book-tax differences decrease as the equity-based pay of executives increases. The results are robust across three alternative measures of tax planning.

Equity-based compensation plays an important role in managerial discretion on tax planning and earnings management. The findings suggest that, although equity incentives promote a high level of both tax planning and earnings management, they motivate managers to constrain the level of earnings management to avoid larger book-tax differences.

This paper aims to examine the development of expertise in an applied discipline by addressing the research question: How is professional expertise developed in an applied profession?

Using a grounded theory methodology (GTM), nine technical-tax experts, and three experienced, non-expert tax professionals were interviewed regarding their experience in developing technical-tax expertise. Using GTM procedures, a core concept and variables (categories and properties of categories) were identified. A theory is advanced which explains the interaction of the core concept and the variables.

This theory proposes that expertise in applied disciplines occurs through years of engaging in the high-value, non-routine work. Professionals with an intelligence matched to the discipline and willingness to work hard are more likely to be successful in this non-routine work. Professionals who find the discipline fascinating and who revel in ambiguity are likely to repeatedly seek this non-routine work. Finally, professionals in organizations with complex client issues are more likely to have opportunities to engage in non-routine work.

This study proposed a theory related to a very specific profession – tax accounting. Future research would be appropriate to determine whether other applied disciplines have a similar dynamic in developing expertise.

Based on existing theories of expertise, this study developed a new theory of how professional expertise is developed in an applied discipline.

This analysis assesses the barriers to innovation Japanese executives must contend with and outlines key strategies to help their organizations, and all companies that seek to compete in global marketplaces, assume a leadership role in implementing a business ecosystem strategy.

To better understand the economic and management challenges Japan’s business leaders face and how they are addressing them, the IBM Institute for Business Value in collaboration with Oxford Economics conducted a survey of 1,151 Japanese executives across 17 industries.

While the strategy of opening up innovation processes to customers, partners and other stakeholders has been adopted successfully in many nations, Japanese organizations appear stuck in closed, insular innovation paradigms

Japanese organizations need to embrace entirely new customer value propositions, build new partnering arrangements and more effectively harness the power of innovation by taking four key sets of actions that: Re-imagine customer experience; Redefine business ecosystems; Promote ecosystem connectivity; Revitalize innovation governance.

A bold analysis of why Japanese business leaders largely ignore new forms of competition emanating from startups or emergent cross-industry players, even as traditional industries such as banking now anticipate massive technology-fueled disruption and how they can change.