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This paper suggests that the proliferation of highly sophisticated corporate tax shelters has been a major reason for the decline of corporate income tax as a percentage of GDP and of total Federal receipts. Many of these shelters have extended beyond solid tax planning and into the realm of subversion. The controversy surrounding possible remedies for these abuses is just as lively as the debates surrounding the tax shelters themselves. This article explores the nature of a variety of tax shelters in an effort to illustrate the insidious nature of the corporate tax shelter problem and then discusses solutions, both legislative and nonlegislative, designed to curb these abuses.

Misconduct by lawyers in law firms is often attributed to pressures from increasing competition for legal services. Modern firms do face fierce competitive pressures. We can gain more subtle insights, however, by focusing on the specific markets in which particular firms operate and how forms of influence in law firms interact with common patterns of behavior in organizations. This chapter draws on this approach to analyze the experience of Jenkens & Gilchrist, a national law firm that had to close its doors in 2007 because of tax shelter work that triggered civil lawsuits and government investigations.

This study aims to investigate the impact tax shelters and cost of debt in Iran. It also aims determine methods to identify tax-aggressive policies through corporate structure and corporate policies, as well as various solutions to handle these issues.

For this purpose, the data of 155 listed companies on the Tehran Stock Exchange (TSE) during the years of 2008-2015 will be considered. The number of observations includes 1,085 companies. Data was analyzed using logistic panel regression with R software.

The results of the hypotheses show that financial leverage use is not inversely related to companies’ tax-aggressive policies. There is no direct relationship between sales and financial leverage. Overall, there is no inverse relationship between tax shelters and total debt.

The results extend the empirical findings of Graham and Tucker and Wilson. The authors also investigated the relationship between tax shelters and financing (total debt). These findings are crucial to the state; although several studies with similar subjects have been conducted in different countries, the current study is the first of its type in Iran.

The purpose of this paper is to examine the relationship between suspicious executives and tax shelters.

Sample includes the 155 companies listed on the Tehran Stock Exchange during a period of seven years, from 2008 to 2015. Data were analyzed by using logistic panel regression with R software.

The results show that there is no association between the presence of suspicious executives and tax shelters or the firm value or both of them (tax shelters and the firm value).

The authors also investigated the implications of the firm value on suspicious executives. These findings are crucial to the state. However, several studies with similar subjects have been conducted in different countries. The current research is the first study in Iran.

This study examines short selling as one external determinant of corporate tax avoidance. Prior research suggests that short sellers have information advantages over retail investors, and high short-interest levels are a bearish signal of targeted stock prices. As a result, when short-interest levels are high, managers have been shown to take actions to minimize the negative effect of high short interest on firms’ stock prices. Tax-avoidance activities may convey a signal of bad news (i.e., high stock price crash risk). We predict that, when short-interest levels are high, managers possess incentives to reduce firm tax avoidance in order to reduce the associated stock price crash risk. Consistent with this prediction, we find that short interest is negatively associated with subsequent tax-avoidance levels. This effect is incremental to other factors identified by prior research. We conclude that short selling significantly constrains corporate tax avoidance.

Examines the way in which the 1986 Tax Reform Act affected the status of US real estate as a tax shelter. Demonstrates that because tax benefits previously were an important component of total returns from income producing real estate, its immediate effect is to reduce after‐tax returns from real estate. Argues that if market values fall and rents rise, however, after‐tax returns from income producing real estate should be sufficient to attract individual US investors. Adds that the 1986 Tax Act should attract more US pension funds and foreign investors to US investment real estate given that the buying advantage of US investors has been reduced.

This paper aims to investigate the economic consequence of the tax reductive strategy on stock price. The authors’ theory, empirically reinforced, suggests managerial tax aggressiveness endangers the corporation through a heightened risk in stock price crashing. Information opacity worsens the situation by reinforcing the relationship. Policymakers should emphasize two aspects: market openness and tighter institutional monitoring. The evidence shown in this paper demonstrates that these two weaken the tax aggressiveness impact on risk of a crashing stock price.

The sample in this paper consists of 9,702 observations from listed firms from 2008 to 2013 in China. The tax rate is manually collected and all the other original data used in this study are sourced from Wind and China Capital Market and Accounting Research databases. Both logistic regression and ordinary least squares regression methods are used to test the hypothesis in this paper.

One key insight is in tax aggressiveness to be strongly correlated with a greater risk of future stock price crashing. The authors also found information opacity to exert a positive moderating effect. That is, the higher the information opacity, the stronger and more positive the correlation between tax aggression and stock price crash risk. However, the market process and an institutional investor have opposite, negative impacts. An open market environment reduces their correlativeness. Similarly, stronger institutional vigilance leads to an attenuation of such a co-relationship.

The findings of this paper have wide policy implications for management and control by authorities of listed corporations. Aggressiveness in management of corporate taxes accentuates the risks borne by stockholders. If so, internally within the corporation, such aggression shown by management, if not proscribed, could be subject to scrutiny, possibly by an independent committee. Externally, this may be countered by the authority in emphasizing three key factors: openness in information sharing, the market environment and tighter institutional monitoring.

This study provides a consequential theory of aggressive management of tax, rigorously analyzed and strongly, empirically supported. Overall, aggressiveness in tax management is related with assumption of higher risks in the crashing of stock price. The relationship is enhanced through information opacity, but reduced via market environment and institutional monitoring.

This paper aims to investigate whether the level of social capital of the region in which a firm is headquartered affects its tax avoidance activities. Social capital can be defined as the mutual trust in society and literature shows that firms headquartered in high social capital regions exhibit higher level of corporate social responsibility. Recent research suggests that some stakeholders consider tax avoidance as a socially irresponsible and illegitimate activity, whereas others deem corporate tax payments as detrimental to social welfare because they hurt economic development. Building on this debate, the relationship between social capital and tax avoidance is empirically investigated.

A sample of 52,962 firm-year observations over the period 1990-2014 was used to empirically investigate the relationship between social capital and tax avoidance.

Consistent with the idea that managers consider corporate tax payments as a socially responsible action, evidence was found that firms headquartered in areas with high social capital engage significantly less in tax avoidance activities. It was also documented that the negative impact of social capital on tax avoidance is stronger in the presence of high religiosity, high corporate performance and lower sensitivity of CEO’s compensation to stock volatility.

This paper extends research on social capital and improves the understanding of the effect of the social environment on managerial decision. Importantly, by studying the relationship between social capital and tax avoidance, the authors add to the recent debate on companies’ perception of the desirability of tax avoidance activities from a social viewpoint.

This paper takes a unique approach to provide additional insight into the agency view of tax avoidance. We directly investigate the association between the presence of agency conflicts and corporate tax avoidance. Using a measure of CEO centrality, developed by Bebchuk, Cremers, and Peyer (2011), we identify settings in which agency conflicts are likely to be high. In contrast to prior literature, our primary tests do not rely on the inferences of market participants regarding tax avoidance. We find that CEO centrality is positively and significantly associated with tax avoidance. Additionally, we analyze the mediating role of monitoring by institutional investors in our setting. We find that the relation between tax avoidance and the existence of agency conflicts is strongest for firms with low levels of CEO monitoring. We also add to prior literature by investigating the implications of our setting on future accounting performance and future firm value.

This chapter applies an “integrative” model to examine the impact and interaction of economic and moral/social factors in the corporate tax compliance context. More specifically, it examines whether social norms moderate the effect of economic factors in this context.

Fifty-five MBA students assumed corporate CFO roles and analyzed a proposed aggressive corporate tax shelter transaction (“tax shelter”). Participants indicated whether they would recommend the tax shelter and answered questions regarding the transaction and their corporate tax compliance views.

Hierarchical Regression results indicate that, in the corporate tax compliance context, decision makers’ norms (moral/social factors) moderate the effect of perceived expected value of aggressive tax transactions (economic factors). More specifically, results indicate that (1) perceived legality of aggressive corporate tax transactions significantly impacts willingness of corporate decision makers to recommend them, even when controlling for perceived economic effect of the transaction, and (2) due to moral/social factors, corporate decision makers often may not support aggressive tax treatments with material positive expected values.

Accordingly, (1) custom and social factors should be integrated into the corporate tax compliance decision-making framework, and (2) campaigns to strengthen corporate tax compliance should focus on the law’s text and intent as well as upon sanctions for noncompliance.