Author : Han Shi
Publisher :
ISBN 13 :
Total Pages : 158 pages
Book Rating : 4.:/5 (11 download)
Book Synopsis Essays on the Tax Policy and Insider Trading by : Han Shi
Download or read book Essays on the Tax Policy and Insider Trading written by Han Shi and published by . This book was released on 2017 with total page 158 pages. Available in PDF, EPUB and Kindle. Book excerpt: In the first essay I examine the relation between firm advertising and tax aggressiveness. Advertising increases firm visibility in both the product and the financial market. While investors would appreciate more tax savings, they are aware of the negative impact of tax aggressiveness on consumers views of the firm and hence its competitive positions in the product market. We find that firms that spend more on advertising have fewer tax sheltering activities, lower book-tax differences, and higher cash effective tax rates. Specifically, an increase of 1% on Advertisingi,t (ADVGPi,t), the firm pays an additional tax of $0.70 million ($10.92 million). However, the negative impact of advertising on tax aggressiveness becomes weaker (and even reverses) for firms having great transparency, more public scrutiny, or strong external monitoring. We control for endogeneity using propensity score matching and an instrumental variable approach. Our findings are consistent with the argument that advertising enhances corporate reputation and is an important determinant in firms tax planning.