Cost behavior around corporate tax rate cuts

Jesper Per Alexander Haga; Henrik Höglund; Dennis Sundvik

doi:10.1016/j.intaccaudtax.2019.01.001

Cost behavior around corporate tax rate cuts

Jesper Per Alexander Haga, Henrik Höglund, Dennis Sundvik

Forskningsoutput: Tidskriftsbidrag › Artikel › Vetenskaplig › Peer review

17 Citeringar (Scopus)

Sammanfattning

In this study, we investigate cost behavior of companies in Organisation for Economic Co-operation and Development (OECD) member countries before corporate tax rate cuts become effective. We consider such events to generate strong incentives for intertemporal cost shifting. We analyze the time period between 2011 and 2016, which includes 32 tax reductions. The results show that companies exhibit income-decreasing selling, general, and administrative cost behavior before tax rate cuts, and that the extent is proportional to the magnitude of the decrease in the tax rate. Furthermore, we find stronger evidence of this form of tax-induced earnings management in lower tax compliance and code law countries, as well as for private companies.

Originalspråk	Engelska
Referentgranskad vetenskaplig tidskrift	Journal of International Accounting, Auditing and Taxation
Volym	34
Nummer	March
Sidor (från-till)	1-11
Antal sidor	11
ISSN	1061-9518
DOI	https://doi.org/10.1016/j.intaccaudtax.2019.01.001
Status	Publicerad - 15.01.2019
MoE-publikationstyp	A1 Originalartikel i en vetenskaplig tidskrift

Nyckelord

512 Företagsekonomi

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10.1016/j.intaccaudtax.2019.01.001

Manuscript_JIAATAccepterat manuskript, 2,65 MBLicens: CC BY-NC-ND

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title = "Cost behavior around corporate tax rate cuts",

abstract = "In this study, we investigate cost behavior of companies in Organisation for Economic Co-operation and Development (OECD) member countries before corporate tax rate cuts become effective. We consider such events to generate strong incentives for intertemporal cost shifting. We analyze the time period between 2011 and 2016, which includes 32 tax reductions. The results show that companies exhibit income-decreasing selling, general, and administrative cost behavior before tax rate cuts, and that the extent is proportional to the magnitude of the decrease in the tax rate. Furthermore, we find stronger evidence of this form of tax-induced earnings management in lower tax compliance and code law countries, as well as for private companies.",

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AU - Sundvik, Dennis

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N2 - In this study, we investigate cost behavior of companies in Organisation for Economic Co-operation and Development (OECD) member countries before corporate tax rate cuts become effective. We consider such events to generate strong incentives for intertemporal cost shifting. We analyze the time period between 2011 and 2016, which includes 32 tax reductions. The results show that companies exhibit income-decreasing selling, general, and administrative cost behavior before tax rate cuts, and that the extent is proportional to the magnitude of the decrease in the tax rate. Furthermore, we find stronger evidence of this form of tax-induced earnings management in lower tax compliance and code law countries, as well as for private companies.

AB - In this study, we investigate cost behavior of companies in Organisation for Economic Co-operation and Development (OECD) member countries before corporate tax rate cuts become effective. We consider such events to generate strong incentives for intertemporal cost shifting. We analyze the time period between 2011 and 2016, which includes 32 tax reductions. The results show that companies exhibit income-decreasing selling, general, and administrative cost behavior before tax rate cuts, and that the extent is proportional to the magnitude of the decrease in the tax rate. Furthermore, we find stronger evidence of this form of tax-induced earnings management in lower tax compliance and code law countries, as well as for private companies.

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KW - Tax incentive

KW - Tax reform

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Cost behavior around corporate tax rate cuts

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