This study examines the tax avoidance behavior of firms prior to the issuance, and following the resolution, of SEC tax comment letters. We find that firms that appear to engage in greater tax avoidance are more likely to receive a tax-related SEC comment letter. We also find that firms...

Firms with greater product market power have more slack in their decision making because they are able to, at least partially, insulate their cash flows and earnings realizations from shocks to their economic state relative to other firms. Using the period 1993 through 2010, and multiple proxies...

Product market power provides firms with comparative advantages through more persistent profitability and insulation from competitive threats. These advantages likely provide firms with the ability to engage in greater tax avoidance. We present evidence consistent with this hypothesis. We also...