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The Impact of Corporate Tax Avoidance on Analyst Coverage and Forecasts

He, G.; Ren, H.M.; Taffler, R.

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Authors

H.M. Ren

R. Taffler



Abstract

Corporate tax avoidance is likely to be associated with a high level of earnings management and with high financial opacity in the time-series. On this basis, we hypothesize that analyst coverage is negatively associated with corporate tax avoidance. Our results confirm this conjecture, and are robust to using a firm-fixed-effects model and a quasi-natural experiment to control for potential endogeneity. Additional analysis shows that analyst coverage is negatively related to tax risk, but there is no evidence that the informativeness of, or errors in, analyst forecasts are associated with tax avoidance. Overall, our study advances understanding of the implications of corporate tax avoidance for analyst behavior.

Journal Article Type Article
Acceptance Date Feb 11, 2019
Online Publication Date Feb 26, 2019
Publication Date Feb 28, 2020
Deposit Date Feb 11, 2019
Publicly Available Date Mar 1, 2019
Journal Review of Quantitative Finance and Accounting
Print ISSN 0924-865X
Electronic ISSN 1573-7179
Publisher Springer
Peer Reviewed Peer Reviewed
Volume 54
Issue 2
Pages 447-477
DOI https://doi.org/10.1007/s11156-019-00795-7
Public URL https://durham-repository.worktribe.com/output/1308367

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Published Journal Article (Advance online version) (874 Kb)
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Publisher Licence URL
http://creativecommons.org/licenses/by/4.0/

Copyright Statement
Advance online version This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution,
and reproduction in any medium, provided you give appropriate credit to the original author(s) and the
source, provide a link to the Creative Commons license, and indicate if changes were made.





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