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Article: Corporate In‐house Tax Departments

TitleCorporate In‐house Tax Departments
Authors
Keywordstax department
tax planning
tax compliance
tax avoidance
tax risk
Issue Date2021
PublisherWiley. The Journal's web site is located at http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1911-3846/
Citation
Contemporary Accounting Research, 2021, v. 38 n. 1, p. 443-482 How to Cite?
AbstractIn‐house human capital tax investment is a significant input to a firm's tax decisions. Yet, due to the lack of data on corporate in‐house tax departments, there is little empirical evidence on how tax departments are associated with tax planning and compliance outcomes. We expect the size of tax departments to be positively associated with the effectiveness of tax planning and compliance. Using hand‐collected data on the number of corporate tax employees in S&P1500 firms over the 2009‐2014 period, we find that firms with larger tax departments are associated with lower and less volatile cash effective tax rates. Furthermore, using tax employees' specialization, we identify tax departments' relative focus on planning or compliance and document a trade‐off between tax avoidance and tax risk. Specifically, tax departments with more of a tax planning focus have incrementally greater tax avoidance but higher tax risk, whereas tax departments with more of a tax compliance focus have incrementally lower tax risk but higher tax rates. Overall, this paper contributes to the literature by looking inside the “black box” of corporate tax departments and shedding light on the importance of human capital tax investment for tax outcomes.
Persistent Identifierhttp://hdl.handle.net/10722/286067
ISSN
2023 Impact Factor: 3.2
2023 SCImago Journal Rankings: 3.086
ISI Accession Number ID

 

DC FieldValueLanguage
dc.contributor.authorChen, X-
dc.contributor.authorCheng, Q-
dc.contributor.authorChow, T-
dc.contributor.authorLiu, Y-
dc.date.accessioned2020-08-31T06:58:37Z-
dc.date.available2020-08-31T06:58:37Z-
dc.date.issued2021-
dc.identifier.citationContemporary Accounting Research, 2021, v. 38 n. 1, p. 443-482-
dc.identifier.issn0823-9150-
dc.identifier.urihttp://hdl.handle.net/10722/286067-
dc.description.abstractIn‐house human capital tax investment is a significant input to a firm's tax decisions. Yet, due to the lack of data on corporate in‐house tax departments, there is little empirical evidence on how tax departments are associated with tax planning and compliance outcomes. We expect the size of tax departments to be positively associated with the effectiveness of tax planning and compliance. Using hand‐collected data on the number of corporate tax employees in S&P1500 firms over the 2009‐2014 period, we find that firms with larger tax departments are associated with lower and less volatile cash effective tax rates. Furthermore, using tax employees' specialization, we identify tax departments' relative focus on planning or compliance and document a trade‐off between tax avoidance and tax risk. Specifically, tax departments with more of a tax planning focus have incrementally greater tax avoidance but higher tax risk, whereas tax departments with more of a tax compliance focus have incrementally lower tax risk but higher tax rates. Overall, this paper contributes to the literature by looking inside the “black box” of corporate tax departments and shedding light on the importance of human capital tax investment for tax outcomes.-
dc.languageeng-
dc.publisherWiley. The Journal's web site is located at http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1911-3846/-
dc.relation.ispartofContemporary Accounting Research-
dc.rightsAccepted (peer-reviewed) Version This is the peer reviewed version of the following article: [Contemporary Accounting Research], which has been published in final form at [10.1111/1911-3846.12637]. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions.-
dc.subjecttax department-
dc.subjecttax planning-
dc.subjecttax compliance-
dc.subjecttax avoidance-
dc.subjecttax risk-
dc.titleCorporate In‐house Tax Departments-
dc.typeArticle-
dc.identifier.emailChow, T: tchow1@hku.hk-
dc.identifier.authorityChow, T=rp02697-
dc.description.naturepostprint-
dc.identifier.doi10.1111/1911-3846.12637-
dc.identifier.scopuseid_2-s2.0-85097842932-
dc.identifier.hkuros313643-
dc.identifier.volume38-
dc.identifier.issue1-
dc.identifier.spage443-
dc.identifier.epage482-
dc.identifier.isiWOS:000600501200001-
dc.publisher.placeCanada-
dc.identifier.issnl0823-9150-

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