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The purpose of the study is to investigate the impact of tax planning activities on the firm value of FTSE 100 firms. We employ static and dynamic panel regression analyses on a sample of 70 companies drawn from the UK FTSE 100 over a five-year period (2006–2010). Empirical evidence suggests that tax planning activity as measured by the proxies based on reported accounting information has a negative impact on firm value. Moreover, the results from the Generalized Methods of Moments (GMM) models suggest significant dynamics in firm value, i.e., the current firm value is positively affected by the past firm value. The findings imply the need for a full review of the adequacy and relevance of tax accounting disclosure and therefore have policy implications for accounting standard setters.

The existing literature documents mixed evidence toward the association between corporate social responsibility (CSR) and corporate tax planning (e.g., Davis, Guenther, Krull, & Williams, 2016; Hoi, Wu, & Zhang, 2013). In this study, I aim to identify a causal relationship between CSR and tax planning, leveraging the staggered adoptions of constituency statutes in US states, which is a plausibly exogenous shock to firms' emphasis on their social responsibility. In general, the statutes permit firm directors to consider the interests of all constituents when making business decisions, including those who benefit from firms paying their fair share of income taxes. Thus, the adoption of the statutes raises the importance of firms' social responsibility in paying income taxes. Employing a staggered difference-in-differences (DiD) method, I find that firms incorporated in states that have adopted constituency statutes exhibit significantly higher effective tax rates (ETRs) based on current tax expense. This causal relationship suggests that managers, with the legitimacy to consider the social impact of tax avoidance, become less aggressive in tax planning. I further find that the effect of adoption is stronger for financially unconstrained firms and firms in retail businesses, where the demand (cost) for tax avoidance is lower (higher). Finally, I show that my main results are driven by firms located in states with a high sense of social responsibility and firms with high levels of tax avoidance prior to the adoption. Overall, the findings in this chapter contribute to the literature by delineating a negative causal relationship between CSR and tax avoidance and identifying a positive social impact brought by the passage of constituency legislation.

This project requires students to analyze and make a client recommendation for the most tax-effective saving option, comparing a traditional individual retirement account (IRA) versus Roth IRA. Students analyze the two alternatives and track growth as well as projected tax liability over the life of the client to determine the strategy that generates the best outcome for the client. The project emphasizes principles of tax planning to illustrate that the solution with the smallest tax liability in the short term is not necessarily the most beneficial option over the long term, as well as how this often is in conflict with a client’s expectations and tax preparer tactics utilized to attract new clients. Students will demonstrate critical thinking skills through the analysis of two options for a client, and the communication of the findings with a recommendation through a client letter.

The purpose of this chapter is to serve as a resource for accounting faculty seeking tax-related cases to include in their courses. This annotated bibliography provides a table and discussion of 50 educational tax cases published in six major accounting journals from 2003 to 2021. Cases are classified and discussed by recommended course placement. In addition, the authors make observations about trends in case content and format. This chapter complements the Fogarty (2022) review and commentary on tax cases published in this volume.

Against the background of increasing regulation and spotlight on the tax position of MNEs, this study explores the relationship between tax and performance measurement. The paper is informed by a series of in-depth semi-structured interviews conducted in 2006 with 26 senior tax executives from 15 Silicon Valley-based companies. We also draw on documentary evidence including the relevant 10K reports and take an interpretive approach to the analysis. Many of the performance measures referred to in prior literature were employed in the companies. There was no evidence to suggest the profit centre performance measurement model is being adopted by MNEs for their tax departments. Two distinct aspects particularly exercised the interviewees, that is, the effective tax rate (ETR) and post-tax versus pre-tax performance measurement. Many interviewees did not perceive the ETR as being an appropriate measure of performance, yet they recognised its importance internally and externally. Many companies worked on the basis that there is an ‘acceptable range’ of ETRs which won’t give rise to any unwanted questions. Most interviewees shared the view that a post-tax basis of measuring performance of business units might only serve to increase tax risks, preferring instead for the in-house tax executives to remain the exclusive tax knowledge experts. This study contributes to the diversification of tax research within accounting by demonstrating how qualitative work can provide unique insights. It enhances our understanding of how performance measurement of tax might influence the tax-planning behaviour of in-house tax executives and cautions against exclusive reliance on the ETR as a measure of the effect of tax planning.

This chapter presents a seven-part case developed for use in a graduate-level tax planning class. The case is organized in a taxpayer/business “life-cycle” approach. Over the semester the case follows a married couple as they consider a number of investments, start a business, and expand the business. As the case progresses, the couple faces increasingly complex tax and business issues. The couple eventually winds down their involvement in the business and begins to plan for their retirement years. This chapter also provides a review of behavioral tax research published in the top accounting journals over the period 2004–2013. The chapter concludes with a discussion of how the case could be adapted by behavioral tax researchers in their research programs and perhaps by accounting firms in their training programs.

I examine patterns of making or deferring strategic repatriations that firms can use to either meet analysts' forecasts or defer to maintain future reported earnings flexibility. First, I examine the extent to which firms repatriate earnings from high foreign tax subsidiaries to decrease US tax expense, resulting in increased net income and lower cash taxes. Using federal tax return information, I find evidence that firms strategically repatriate these earnings to meet or beat current analysts' forecasts. Next, I find evidence that firms that are able to obtain current year tax reductions defer these repatriations in an attempt to build cookie-jar reserves. Lastly, I find that firms do not disclose high foreign tax repatriations (HTRs), even when required by SEC rules. This study contributes to the earnings management, tax avoidance, and disclosure literature by examining a discretionary tax planning strategy.

The purpose of this chapter is to discuss the relation between tax reporting and financial reporting, their influence on transparency, and empirical implications.

This study examines how creditor interventions after debt covenant violations affect corporate tax avoidance. Using a regression discontinuity design, we find that creditor interventions increase borrowers' tax avoidance. This effect is concentrated among firms with weaker shareholder governance before creditor interventions and among those with less bargaining power during subsequent debt renegotiations. Our results indicate that creditors play an active role in shaping corporate tax policy outside of bankruptcy.

Both accounting professionals and accounting academics have noted the importance of communication skills for the career success of students. Further, the general consensus from the academic and practitioner literature is that these communication skills are an area in which many students could use improvement. One factor that has been shown to impact the improvement and development of these skills is communication apprehension.

In this chapter, we describe a combination of pedagogical methods we employed in tax classes at two universities to reduce written communication apprehension among students. More specifically, we draw ideas from communications research which suggest that increased writing opportunities, progressively increasing the weighting of the assignments, using models and examples for study and comparison, and trying to make feedback more effective may help to reduce written communication apprehension. We implemented this suggested approach by using a series of assignments that incorporated writing components.

Results suggest that writing apprehension reduced from the beginning of the semester to the end of the semester. Further, the reduction in writing apprehension was even greater for those students who began the semester with high written communication apprehension. In addition, the results of the survey questions at the end of the semester suggest that the methods also improved students’ confidence in preparing tax-related written communication.