We investigate the joint hypothesis that a) tax expense contains information about core profitability that is incremental to reported earnings and b) that information is reflected in stock prices with a delay. We find that seasonally-differenced quarterly tax expense, our proxy for tax expense...

We investigate whether management's decision regarding the recognition of the valuation allowance for deferred tax assets (VA) under ASC 740 provides incremental information about the persistence of accounting losses. We introduce a classification scheme that assigns loss firm-years into three...

Over the past years there has been increasing interest in the informational importance of the differences between accounting or book income and taxable income. This subject, known as book-tax differences (BTDs), involves various aspects, mainly the motives for these differences, the potential...

We investigate whether management's decision regarding the recognition of the valuation allowance (VA) for deferred tax assets provides incremental information about the persistence of accounting losses. We introduce a classification scheme that assigns loss firm-years into three categories...

This paper examines earnings management around the reduction in the corporate tax rate from 35% to 21% as enacted by the Tax Cuts and Jobs Act (TCJA) of 2017. Building on a theoretical model that considers a higher level of book-tax conformity of ‘real earnings management’ (REM) relative to...

As tax expense reflects value lost to taxes paid, it should be negatively associated with value, provided non-tax, value-relevant information is controlled for. However, valuation regressions estimated in prior research — using contemporaneous tax expense and non-tax variables — document...

Firms invest non-trivial resources to avoid paying taxes. One of the presumed incentives for doing so is that it should increase the value of the firm. Surprisingly, a large number of studies find that tax expense is positively related to stock returns, suggesting that paying more taxes is good...

We examine the capital market reaction to the announcement of the European Union (EU) to introduce a public tax country-by-country reporting (CbCR) regime. By employing an event study methodology, we find a significant cumulative average abnormal return (CAAR) of -0.699%, which translates into a...

In late 2008 Selectica's net operating loss poison pill was triggered by Trilogy/Versata. Litigation ensued in Delaware Court of Chancery over the propriety of the poison pill, which Selectica instituted to protect its $167 million of NOLs from the limitations of Internal Revene Code (I.R.C.)...

This paper augments prior research on how tax-related information disclosures affect a company's market value, by investigating (1) whether voluntary management forecasts of the effective tax rate (ETR guidance) are considered by the addressees of such information and (2) whether tax-related...