Review of archival tax research: Are there any big potatoes left?

Review of archival tax research: Are
there any big potatoes left?
ATA Doctoral Consortium
Thomas Omer
University of Nebraska-Lincoln
A Brief History of Tax (Time)
• In the beginning
– I have no idea, I was not there
– You might ask Ed Outslay
• 1983 AAA Doctoral Consortium
– Mark Wolfson informs participants there is only one tax paper in
JAR (his)
• 1989 Tax Camp
– Scholes and Wolfson Framework
• 2001 Shackelford and Shevlin Review
• 2010 Hanlon and Heitzman Review
• 20?? Where might we go?
– Back to the Future-Scholes and Wolfson Framework
Recent Literature
Non-Tax Costs
Tax Strategy
Tax Risk
Tax Related
Scholes and Wolfson Revisited
• Non-Tax Costs
– Have we adequately explored the contexts in which
these are important and the measures that are
representative of the construct?
• Tax Strategy
– We use the words “tax strategy” but can we really
identify one?
• Do we need to borrow some theory from other literatures?
– Can we identify attributes of tax strategy that are
more important and used in practice?
• Adaptability, Reversibility, Assurance (SW Chapter 7)
– Will these change our inferences about firm behavior?
Scholes and Wolfson Revisited
• Tax Risk
– How do we measure this construct?
– This is likely a moderator of tax outcomes
Field of “Big Potatoes”?
Non-Tax Costs?
Tax Strategy?
Aggression Level
Tax Related
Tax Risk?
Suggestions for Finding “Big Potatoes”
• Think of firms holistically
– Currently, we model individual parts without really
considering the collective interrelations of the parts.
• Confirmatory Factor Analysis/Structural Equation Modeling
• Think of strategy as a collection of decisions
– Do firms exhibit patterns that repeat?
• Can we map those patterns to infer tax strategy
• Tax risk is not entirely explained by economic risk
– Tax risk is complex interaction of many factors
• Many firms discuss this in their 10Ks
• Harder task but likely a necessary one
Suggestions for Finding “Big Potatoes”
• Ask somebody
– Practitioner surveys/Client surveys
– Develop archival tests of survey results
• (This is happening, but there is some resistance to survey research)
• Don’t assume we know something we don’t
– Mixed prior literature or poor proxies for underlying constructs
• What is non-avoidance?
– If firms are not avoiding, what are they doing, and are there real
effects to be observed?
• How do firms avoid?
– Analogous to the real earnings management versus accruals
management literature
• Do we have innate avoidance and discretionary avoidance and can we
separate them
Thank you!

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