We examine whether executive stock options (ESO) encourage managers to make risky investments on behalf of shareholders. For a sample of oil and gas producers, we find, as predicted, that the variance of cash flows from exploration activity and the extent of price risk exposure hedged are...

In a recent working paper, Plesko (1999) uses confidential tax return data to evaluate alternative measures of corporate average and marginal tax rates and concludes quot;The results suggest that commonly used measures of average tax rates provide little insight about annual corporate tax...

We demonstrate that the effect of special items on the time-series of seasonally-differenced quarterly earnings differs from the effect of other components of earnings. Focusing on earnings four quarters subsequent to the special item where the time-series differences are most pronounced, we...

We examine whether the information content of earnings is inversely related to the degree of conformity between financial accounting income and taxable income. Our inquiry exploits a natural experiment first examined by Guenther et al. (1997) in which a set of U.S. firms were forced to increase...

This paper examines why CFOs become involved in material accounting manipulations. We find that while CFOs bear substantial legal costs when involved in accounting manipulations, these CFOs have similar equity incentives to the CFOs of matched non-manipulation firms. In contrast, CEOs of...

Taxes represent a significant cost to the firm and shareholders, and it is generally expected that shareholders prefer tax aggressiveness. However, this argument ignores potential non-tax costs that can accompany tax aggressiveness, especially those arising from agency problems. Firms owned/run...

This paper traces the development of archival, microeconomic-based, empirical income tax research in accounting over the last fifteen years. The paper details three major areas of research: (i) the coordination of tax and non-tax factors, (ii) the effects of taxes on asset prices and (iii) the...

We analyze survey responses from nearly 600 tax executives to better understand corporate decisions about real investment location and profit repatriation. Our evidence indicates that avoiding financial accounting income tax expense is as important as avoiding cash taxes when corporations decide...

Using data from a survey of tax executives, we examine the corporate response to the one-time dividends received deduction in the American Jobs Creation Act of 2004. We describe the firms' reported sources and uses of the cash repatriated and we also examine non-tax costs companies incurred to...

This paper examines the impact of politicians' ideological preferences on corporate taxation. Our tests exploit the implementation of the Reform and Opening-up policy in China in 1978 that significantly weakens the communist ideology. We find that, in the post-reform period, the effective tax...