Prior studies suggest that investors have limited attention. Tests of the inattention hypothesis have been performed in the context of relatively small corporate events, particularly earnings announcements. Presumably, large corporate events would always attract sufficient investor attention....

We show that firms with higher stock liquidity engage less in extreme (i.e., either overly aggressive or overly conservative) tax avoidance. The effect of stock liquidity on tax avoidance is economically meaningful, is robust across alternative measures of tax avoidance and stock liquidity, and...

Prior studies suggest that investors have limited attention. Tests of the inattention hypothesis have been performed in the context of relatively small corporate events, particularly earnings announcements. Presumably, large corporate events would always attract sufficient investor attention....