Information processing costs and corporate tax avoidance: Evidence from the SEC’s XBRL mandate |
| |
| Authors: | Jeff Zeyun Chen Hyun A Hong Jeong-Bon Kim Ji Woo Ryou |
| |
| Institution: | 1. Texas Christian University, United States;2. University of California at Riverside, United States;3. City University of Hong Kong, Hong Kong;4. West Virginia University, United States;1. Department of Accounting, Box 8113, North Carolina State University, Raleigh, NC 27695-8113, United States;2. Department of Management, Ca’ Foscari University, Cannaregio 873, 30121 Venice, Italy;1. School of Business, University of Connecticut, 2100 Hillside Rd., Unit 1041A, Storrs, CT 06269, United States;2. College of Business, Colorado State University, 501 W. Laurel St., Fort Collins, CO 80523, United States;1. Oregon State University, United States;2. Purdue University, United States;1. University of Colorado Denver, 1475 Lawrence Street, Denver, CO 80202, USA;2. Bentley University, 175 Forest Street, Waltham, MA 02452, USA;3. Northeastern University, 404 Hayden Hall, 360 Huntington Avenue, Boston, MA 02115, USA;1. Tampere University, Faculty of Management and Business, 33014 Tampere, Finland;2. University of Vaasa, P.O. Box 700, 65101 Vaasa, Finland;3. The University of Auckland Business School, 12 Grafton Road, Auckland, Private Bag 92019, Auckland 1142, New Zealand;1. Lehigh University, USA;2. Santa Clara University, USA;3. Korea Advanced Institute of Science and Technology (KAIST), South Korea;4. California State Polytechnic University, Pomona, USA |
| |
| Abstract: | The IRS uses information contained in financial statements as well as tax returns to detect tax avoidance behavior. We examine the impact on corporate tax avoidance behavior of reductions in the IRS’s information processing costs resulting from the mandatory adoption of XBRL for financial reporting. Motivated by the recent debate in the U.S. Congress over the cost-benefit of mandatory XBRL reporting for small firms, we pay particular attention to small firms, which inherently have relatively high information frictions. We find that the adoption of XBRL for financial reporting results in a significant decrease in tax avoidance. We further find that the negative relation between XBRL reporting and tax avoidance is less prominent for firms subject to more intense IRS monitoring in the pre-XBRL-reporting period. Overall, our results suggest that XBRL reporting reduces the cost of IRS monitoring in terms of information processing, which dampens managerial incentives to engage in tax avoidance behavior. |
| |
| Keywords: | XBRL reporting Tax avoidance Information processing costs IRS monitoring Tax audit risk Tax accrual |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
