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Existing studies find that tax avoidance affects the cost of debt and equity in different ways but does not examine the consequences of these associations. This study examines a direct and important implication of the effect of tax avoidance on the cost of debt and equity: capital structure choices. Using logit regressions, we find that tax avoidance is positively associated with the probability of issuing equity rather than debt. We use mediation (i.e., path) analyses to provide evidence that the effects of overall tax avoidance and risky tax avoidance on pre-corporate tax cost of equity and debt partially explain our main effects. For stronger identification, we exploit a plausibly exogenous Ninth Circuit decision to implement a difference-in-differences design. Finally, we find indirect evidence that managerial focus on GAAP effective tax rate to estimate the after-tax cost of debt (Graham, Hanlon, Shevlin, and Shroff 2017), partially explaining our main results. [ABSTRACT FROM AUTHOR]

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A perspective on the condition of empirical tax research in accounting and a few questions for future research is provided. The Scholes-Wolfson framework is discussed, then exploited to talk about all taxes and all costs to recommend areas of research. Finance and public economics literature must be constantly updated so that research does not become redundant.

The American Jobs Creation Act of 2004 allows U.S. multinational corporations to have a one year window during which then can subtract 85% of extraordinary cash dividends received from their foreign subsidiaries. The study looks into investor's assessments on how US multinational corporations will react to the temporary tax holiday. Market valuation and stock regressions were estimated to see if investors anticipate that firms with low-taxed foreign earnings will make use of this tax holiday and repatriate their foreign earnings at a noticeably low tax rate.

Recent accounting research suggests that individual executives play a significant role in shaping a firm's tax planning. Building on psychology research that finds sports interests reflect an individual's risk-taking preferences, we develop a novel measure of innate and non-pecuniary CEO risk attitudes based on the riskiness of CEOs' sports hobbies and examine whether the measure is associated with corporate tax aggressiveness. We find that firms managed by CEOs with riskier sports hobbies are more aggressive in their tax planning. This association is more pronounced for CEOs with greater financial incentives and greater power in making decisions. Our results are robust to using alternative measures of CEO sports risks, and after accounting for the self-selection of the disclosure of CEO sports hobbies. Data Availability: Public sources cited in the paper. JEL Classifications: H26; M41; G41; G34. [ABSTRACT FROM AUTHOR]

Copyright of Contemporary Accounting Research is the property of Canadian Academic Accounting Association and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder's express written permission. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)