Many studies use GAAP effective tax rates (ETR) as proxies for tax avoidance and rely on the maintained assumption that very low (high) ETRs represent the greatest (least) tax avoidance. We provide large-sample empirical evidence on how well ETRs capture cross-sectional differences in tax...

This study examines the nature of tax avoidance among loss firms. Using the methodology in Schwab, Stomberg, and Xia (2022) to identify and classify deliberate and intentional tax avoidance activities from companies’ effective tax rate reconciliations, we find that approximately 35 percent of...

We provide evidence of the final, immediate financial statement impact of some of the major provisions of the 2017 U.S. tax law changes, commonly referred to as the Tax Cuts and Jobs Act (TCJA). We also provide evidence on the accuracy of companies' estimates. Using hand-collected financial...

Accounting estimates are susceptible to managerial errors and bias, thereby generating audit risk. Quantifying and understanding the determinants and consequences of auditors’ influence on clients’ accounting estimates is therefore important. Using a novel econometric technique, we estimate...

We use data envelopment analysis (DEA) to develop a measure of effective tax planning that is theoretically aligned with the Scholes-Wolfson paradigm and captures how efficiently firms maximize after-tax returns given their operating, investing, and financing decisions. We then (1) document the...