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- Title
TAX AVOIDANCE AS A SOURCE OF FINANCING: USAGE OF PERMANENT VERSUS TEMPORARY CASH TAX SAVINGS.
- Authors
Campbell, Stephen; Kasztelnik, Karina
- Abstract
The purpose of this paper is to analyze tax avoidance as a source of financing. While tax avoidance has been investigated, we extend prior analyses to investigate whether the components of total cash tax savings - permanent and temporary cash tax savings - are used differently. We find that temporary tax savings are used for investment to a greater extent than permanent tax savings and that investment levels are partially sticky after temporary savings reverse. We perform a range of cross-sectional analyses based on characteristics of the firm and the firm's operating environment. In all cross-sectional analyses, we find that temporary tax savings are used for real investment to a greater extent than permanent tax savings. Finally, we find that cross-sectional heterogeneity in the usage of tax savings is primarily driven by heterogeneity in the usage of temporary tax savings.
- Subjects
TAX planning; TAXATION; CROSS-sectional method
- Publication
Journal of Business & Accounting, 2023, Vol 16, Issue 1, p96
- ISSN
1944-2874
- Publication type
Article