Tax Aggressiveness and Accounting Fraud
Clive Lennox, Petro Lisowsky, Jeffrey Pittman
There are competing arguments and mixed prior evidence on whether firms that are aggressive in their financial reporting exhibit more or less tax aggressiveness. Our research contributes to resolving this issue by examining the association between aggressive tax reporting and the incidence of alleged accounting fraud. Relying on several proxies for tax aggressiveness to triangulate our evidence, we generally find that tax aggressive U.S. public firms are less likely to commit accounting fraud. However, we caution that our results are sensitive to how tax aggressiveness is measured. More specifically, four (two) of the five (three) proxies for firms' effective tax rates (book-tax differences) load positively (negatively) during the 1981-2001 period, implying that fraud firms are less tax aggressiveness. Our inferences persist when we isolate the 1995-2001 period in which accounting impropriety steeply rose and corporate tax compliance steeply fell. Moreover, we continue to find that tax aggressive firms are less apt to fraudulently manipulate their financial statements when we apply factor analysis to identify tax avoidance with a common factor extracted from the underlying proxies and match on propensity.
Journal of Accounting Research
https://doi.org/10.1111/joar.12002
10.1111/joar.12002
Fingerprint Dive into the research topics of 'Tax Aggressiveness and Accounting Fraud'. Together they form a unique fingerprint.
Accounting Fraud Business & Economics
Tax Business & Economics
Book-tax Differences Business & Economics
Effective Tax Rates Business & Economics
Tax Avoidance Business & Economics
Tax Compliance Business & Economics
Fraud Business & Economics
Corporate Tax Business & Economics
Lennox, C., Lisowsky, P., & Pittman, J. (2013). Tax Aggressiveness and Accounting Fraud. Journal of Accounting Research, 51(4), 739-778. https://doi.org/10.1111/joar.12002
Tax Aggressiveness and Accounting Fraud. / Lennox, Clive; Lisowsky, Petro; Pittman, Jeffrey.
In: Journal of Accounting Research, Vol. 51, No. 4, 17.09.2013, p. 739-778.
Lennox, C, Lisowsky, P & Pittman, J 2013, 'Tax Aggressiveness and Accounting Fraud', Journal of Accounting Research, vol. 51, no. 4, pp. 739-778. https://doi.org/10.1111/joar.12002
Lennox C, Lisowsky P, Pittman J. Tax Aggressiveness and Accounting Fraud. Journal of Accounting Research. 2013 Sep 17;51(4):739-778. https://doi.org/10.1111/joar.12002
Lennox, Clive ; Lisowsky, Petro ; Pittman, Jeffrey. / Tax Aggressiveness and Accounting Fraud. In: Journal of Accounting Research. 2013 ; Vol. 51, No. 4. pp. 739-778.
@article{d2e3ee2341384dc380b4a99dcac951b6,
title = "Tax Aggressiveness and Accounting Fraud",
abstract = "There are competing arguments and mixed prior evidence on whether firms that are aggressive in their financial reporting exhibit more or less tax aggressiveness. Our research contributes to resolving this issue by examining the association between aggressive tax reporting and the incidence of alleged accounting fraud. Relying on several proxies for tax aggressiveness to triangulate our evidence, we generally find that tax aggressive U.S. public firms are less likely to commit accounting fraud. However, we caution that our results are sensitive to how tax aggressiveness is measured. More specifically, four (two) of the five (three) proxies for firms' effective tax rates (book-tax differences) load positively (negatively) during the 1981-2001 period, implying that fraud firms are less tax aggressiveness. Our inferences persist when we isolate the 1995-2001 period in which accounting impropriety steeply rose and corporate tax compliance steeply fell. Moreover, we continue to find that tax aggressive firms are less apt to fraudulently manipulate their financial statements when we apply factor analysis to identify tax avoidance with a common factor extracted from the underlying proxies and match on propensity.",
author = "Clive Lennox and Petro Lisowsky and Jeffrey Pittman",
doi = "10.1111/joar.12002",
journal = "Journal of Accounting Research",
publisher = "[Accounting Research Center, Booth School of Business, University of Chicago, Wiley]",
T1 - Tax Aggressiveness and Accounting Fraud
AU - Lennox, Clive
AU - Lisowsky, Petro
AU - Pittman, Jeffrey
N2 - There are competing arguments and mixed prior evidence on whether firms that are aggressive in their financial reporting exhibit more or less tax aggressiveness. Our research contributes to resolving this issue by examining the association between aggressive tax reporting and the incidence of alleged accounting fraud. Relying on several proxies for tax aggressiveness to triangulate our evidence, we generally find that tax aggressive U.S. public firms are less likely to commit accounting fraud. However, we caution that our results are sensitive to how tax aggressiveness is measured. More specifically, four (two) of the five (three) proxies for firms' effective tax rates (book-tax differences) load positively (negatively) during the 1981-2001 period, implying that fraud firms are less tax aggressiveness. Our inferences persist when we isolate the 1995-2001 period in which accounting impropriety steeply rose and corporate tax compliance steeply fell. Moreover, we continue to find that tax aggressive firms are less apt to fraudulently manipulate their financial statements when we apply factor analysis to identify tax avoidance with a common factor extracted from the underlying proxies and match on propensity.
AB - There are competing arguments and mixed prior evidence on whether firms that are aggressive in their financial reporting exhibit more or less tax aggressiveness. Our research contributes to resolving this issue by examining the association between aggressive tax reporting and the incidence of alleged accounting fraud. Relying on several proxies for tax aggressiveness to triangulate our evidence, we generally find that tax aggressive U.S. public firms are less likely to commit accounting fraud. However, we caution that our results are sensitive to how tax aggressiveness is measured. More specifically, four (two) of the five (three) proxies for firms' effective tax rates (book-tax differences) load positively (negatively) during the 1981-2001 period, implying that fraud firms are less tax aggressiveness. Our inferences persist when we isolate the 1995-2001 period in which accounting impropriety steeply rose and corporate tax compliance steeply fell. Moreover, we continue to find that tax aggressive firms are less apt to fraudulently manipulate their financial statements when we apply factor analysis to identify tax avoidance with a common factor extracted from the underlying proxies and match on propensity.
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DO - 10.1111/joar.12002
JO - Journal of Accounting Research
JF - Journal of Accounting Research