The Spread of Aggressive Corporate Tax Reporting: A Detailed Examination of the Corporate-Owned Life Insurance Shelter

Accounting Review - Tập 86 Số 1 - Trang 23-57 - 2011
Jennifer L. Brown1
1Arizona State University**

Tóm tắt

ABSTRACT: This study investigates the spread of aggressive corporate tax reporting by modeling a firm’s decision to adopt the corporate-owned life insurance (COLI) shelter. Prior studies identify firm characteristics associated with aggressive tax reporting (Desai and Dharmapala 2006; Frank et al. 2009) and tax shelter participation (Wilson 2009; Lisowsky 2010). This study examines whether social environment factors explain the pattern of tax shelter adoption. Building on theory related to the diffusion of innovations and institutional isomorphism, I hypothesize direct and indirect ties between prior and potential shelter adopters influence the spread of shelter use. I find that network ties via board interlocks increase the likelihood of adopting the COLI shelter. I also find weak evidence that COLI use spreads geographically. However, I find no evidence that the spread of COLI use is concentrated among a particular set of audit firms or industries.

Từ khóa


Tài liệu tham khảo

Abrahamson, 1993, Institutional and competitive bandwagons: Using mathematical modeling as a tool to explore innovation diffusion, Academy of Management Review, 18, 487, 10.2307/258906

Allison P. D. 1984. Event History Analysis. Beverly Hills, CA:Sage.

Bankman, 1999, The new market for corporate tax shelters, Tax Notes, 83, 1775

Bankman, 2002, Commentary: Modeling the tax shelter world, Tax Law Review, 55, 455

Bankman J. 2004. An academic’s view of the tax shelter battle. In The Crisis in Tax Administration, edited byAaronH. J., and SlemrodJ.. Washington, D.C.:Brookings Institution.

Barth, 1998, Relative valuation roles of equity book value and net income as a function of financial health, Journal of Accounting and Economics, 25, 1, 10.1016/S0165-4101(98)00017-2

Berry, 1990, State lottery adoptions as policy innovations: An event history analysis, The American Political Science Review, 84, 395, 10.2307/1963526

Berry, 1992, Tax innovation in the states: Capitalizing on political opportunity, American Journal of Political Science, 36, 715, 10.2307/2111588

Berry, 1994, The politics of tax increases in the states, American Journal of Political Science, 38, 855, 10.2307/2111610

Bizjak, 2009, Option backdating and board interlocks, Review of Financial Studies, 22, 4821, 10.1093/rfs/hhn120

Box-Steffensmeier, 1997, Time is of the essence: Event history models in political science, American Journal of Political Science, 41, 1414, 10.2307/2960496

Burns, 1993, Adoption and abandonment of matrix management programs: Effects of organizational characteristics and interorganizational networks, Academy of Management Journal, 36, 106, 10.2307/256514

Burt, 1987, Social contagion and innovation: Cohesion versus structural equivalence, American Journal of Sociology, 92, 1287, 10.1086/228667

Cyert R., and March J. G. 1963. A Behavioral Theory of the Firm. Englewood Cliffs, NJ:Prentice Hall.

Davis, 1991, Agents without principles? The spread of the poison pill through the intercorporate network, Administrative Science Quarterly, 36, 605, 10.2307/2393275

Davis, 1997, Corporate elite networks and governance changes in the 1980s, American Journal of Sociology, 103, 1, 10.1086/231170

Desai, 2006, Corporate tax avoidance and high-powered incentives, Journal of Financial Economics, 79, 145, 10.1016/j.jfineco.2005.02.002

DiMaggio, 1983, The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields, American Sociological Review, 48, 147, 10.2307/2095101

Eustice, 2002, Abusive tax shelters: Old “brine” in new bottles, Tax Law Review, 55, 135

Fligstein, 1985, The spread of the multidivisional form among large firms, 1919–1979, American Sociological Review, 50, 377, 10.2307/2095547

Fligstein N. 1990. The Transformation of Corporate Control. Cambridge, MA:Harvard University Press.

Frank, 2009, Are financial and tax reporting aggressiveness reflective of broader corporate policies, The Accounting Review, 84, 467, 10.2308/accr.2009.84.2.467

Galaskiewicz, 1991, Interorganization contagion in corporate philanthropy, Administrative Science Quarterly, 36, 88, 10.2307/2393431

Gergen, 2002, The logic of deterrence: corporate tax shelters, Tax Law Review, 55, 255

Graham, 2006, Tax shelters and corporate debt policy, Journal of Financial Economics, 81, 563, 10.1016/j.jfineco.2005.09.002

Gupta, 1997, Determinants of the variability in corporate effective tax rates: Evidence from longitudinal data, Journal of Accounting and Public Policy, 16, 1, 10.1016/S0278-4254(96)00055-5

Han, 1994, Mimetic isomorphism and its effect on the audit services market, Social Forces, 73, 637, 10.2307/2579824

Haunschild, 1993, Interorganizational imitation: The impact of interlocks on corporate acquisition activity, Administrative Science Quarterly, 38, 564, 10.2307/2393337

Haunschild, 1994, How much is that company worth? Interorganizational relationships, uncertainty and acquisition premiums, Administrative Science Quarterly, 39, 391, 10.2307/2393296

Haunschild, 1997, Modes of interorganizational imitation: The effects of outcome salience and uncertainty, Administrative Science Quarterly, 42, 472, 10.2307/2393735

Haveman, 1993, Follow the leader: Mimetic isomorphism and entry into new markets, Administrative Science Quarterly, 38, 593, 10.2307/2393338

Lisowsky, 2010, Seeking shelter: Empirically modeling tax shelters using financial statement information, The Accounting Review, 85, 1693, 10.2308/accr.2010.85.5.1693

Mahajan V., and Peterson R. 1985. Models for Innovation Diffusion. Beverly Hills, CA:Sage Publications.

March J. G. 1981. Decisions in organizations and theories of choice. In Perspectives on Organization Design and Behavior, edited byVan de Ven, , and JoyceW. F.. New York, NY:Wiley.

Mezias, 1990, An institutional model of organizational practice: Financial reporting at the Fortune 200, Administrative Science Quarterly, 35, 431, 10.2307/2393312

Mintrom, 1998, Policy networks and innovation diffusion: The case of state education reforms, The Journal of Politics, 60, 126, 10.2307/2648004

Mizruchi M. S. 1992. The Structure of Corporate Political Action. Cambridge, MA:Harvard University Press.

Mizruchi, 2006, The conditional nature of embeddedness: A study of borrowing by large U.S. firms, 1973–1994, American Sociological Review, 71, 310, 10.1177/000312240607100207

Novack, 1998, The hustling of X-rated shelters, Forbes, 19

Nurnberg, 2004, Accounting for company-owned life insurance, Accounting Horizons, 18, 109, 10.2308/acch.2004.18.2.109

Omer, 2004, Competitive, political and economic factors influencing state tax policy changes, The Journal of the American Taxation Association, 26, 103, 10.2308/jata.2004.26.s-1.103

Palmer, 1993, Late adoption of the multidivisional form by large U.S. corporations: Institutional, political, and economic accounts, Administrative Science Quarterly, 38, 100, 10.2307/2393256

Paull, 2000, JCT Testimony at Finance Committee hearing on Code’s penalty and interest provisions

Pfeffer, 1981, Management as symbolic action: The creation and maintenance of organizational paradigms, Research in Organizational Behavior, 3, 1

Rao, 1999, Institutional sources of boundary-spanning structures: The establishment of investor relations departments in the Fortune 500 industrials, Organization Science, 10, 27, 10.1287/orsc.10.1.27

Rogers E. 2003. Diffusion of Innovations. 5th edition. New York, NY:Free Press.

Strang, 1998, Diffusion in organizations and social movements: From hybrid corn to poison pills, Annual Review of Sociology, 24, 265, 10.1146/annurev.soc.24.1.265

Stuart, 2010, Board interlocks and the propensity to be targeted in private equity transactions, Journal of Financial Economics, 97, 174, 10.1016/j.jfineco.2010.03.012

U.S. Department of the Treasury, 1990, Report to Congress on the taxation of life insurance company products

U.S. Department of the Treasury. 1999. The Problem of Corporate Tax Shelters: Discussion, Analysis, and Legislative Proposals. Washington, D.C.:U.S. Government Printing Office.

U.S. Senate Permanent Subcommittee on Investigations. 2005. The Role of Professional Firms in the U.S. Tax Shelter Industry. S. Rep. 109-54. Washington, D.C.:U.S. Government Printing Office.

Weisbach, 2002, Ten truths about corporate tax shelters, Tax Law Review, 55, 215

Wilson, 2009, An examination of corporate tax shelter participants, The Accounting Review, 84, 969, 10.2308/accr.2009.84.3.969